I'd like to know for my tax liability (are the Fed and State taxed) for:
Social Security, Dividend Income from stocks, Realized short term gains on stocks
Hello and thank you for your question. To answer this question to your satisfaction there more than likely will be additional information needed. Based on the question I am assuming you are trying to estimate your taxes. If that is correct then the tax estimator link below will be helpful. If not, please respond with more detail so I can fully answer your question.
Thanks for your question! I'd be happy to give you some guidance. I will address your federal and state questions separately.
First, with regards to your federal taxes:
- Social security: between 0 and 85% of your benefits might be taxed. How much you will be taxed depends on your filing status and your Modified Adjusted Gross Income. The IRS has a great tool that you can use to determine how much, if any, of your social security will be taxed in a given tax year:
- https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable (note: this calculator does not show 2023 as a choice yet, but you can use the 2022 tax year as an estimate).
- TurboTax has another great calculator that you can use to estimate what your 2023 federal tax liability might be (like the IRS calculator, it is still pointed to the 2022 tax year; it will be updated for 2023 taxes after the October 16th deadline). https://turbotax.intuit.com/tax-tools/calculators/taxcaster/
- Dividend income: taxation of dividends depends on whether the dividends are qualified or unqualified. Qualified dividends are taxed at either 0%, 15% or 20%, depending on your taxable income and filing status. Non-qualified (aka “ordinary”) dividends are taxed at ordinary income tax rates. Here is a great article that discusses dividend taxes in more detail: https://turbotax.intuit.com/tax-tips/investments-and-taxes/guide-to-taxes-on-dividends/L1jBC5OvB
- Realized short-term gains on stock sales: short-term capital gains are taxed at ordinary income tax rates. Here is a reference article for you on this subject: https://turbotax.intuit.com/tax-tips/investments-and-taxes/capital-gains-and-losses/L7GF1ouP8
Now, let’s talk about Maryland:
- Social security: good news! Maryland does not tax social security at all.
- Dividend income: most dividend income will be subject to Maryland state income taxes; however, any interest on obligations and securities of the State of Maryland and its political subdivisions is not taxable. The same applies to mutual fund dividends attributable to interest received by the fund from U.S. government obligations. (reference: https://www.marylandtaxes.gov/forms/Tax_Publications/Administrative_Releases/Income_and_Estate_Tax_R... and https://www.marylandtaxes.gov/forms/Tax_Publications/Administrative_Releases/Income_and_Estate_Tax_R....
- Realized short-term gains on stock sales: like most states, Maryland taxes capital gains just like it does other ordinary income. How much you are taxed will depend on your total taxable income.
I hope this information is helpful, @csuckling! As my colleague Carmen mentioned, we may need more information about your situation to answer your question more specifically. I'll stay tuned in case you have a follow-up question. Thanks again!
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