Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Tax Time - Question about Tenneesse Dividend Tax
Old 03-18-2012, 10:57 PM   #1
Recycles dryer sheets
Aeowyn's Avatar
 
Join Date: Jan 2011
Location: Scotts Hill, TN
Posts: 105
Tax Time - Question about Tenneesse Dividend Tax

I am a new resident to Tennessee. Tennessee has no income tax and no "capital gains" tax (not completely sure about the latter).

They do have a tax on dividend income but their definition of what is considered dividend income is a little confusing. In the definition of what is taxable it includes "...income from mutual funds including capital gain distributions".

Are there are an Tennessee residents with mutual fund investments out there that can define this a little better?

Does it mean 1099-Div item 1 amounts that include dividend and short term capital gain distributions only? Or does it also include 1099-Div item 2a that documents long term capital gain distributions.

I'm leaning toward just 1099-Div item 1. It makes sense that they since short term capital gain distributions from mutual funds are lumped in with dividends that they would tax them the same.

And I don't think it includes this, but does it include gains realized from the sale of mutual funds reported on 1099-B?
__________________

__________________
Quit my J.O.B to become a farmer/rancher - December 2011
Now working part time from home on contract to support prior employer.
Aeowyn is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-19-2012, 05:55 AM   #2
Thinks s/he gets paid by the post
frayne's Avatar
 
Join Date: Oct 2002
Location: 19th Hole
Posts: 2,529
This might help: http://www.tn.gov/revenue/taxguides/indincguide.pdf

Next question how much are you talking about because if your filing status is MFJ, the first $2500 is exempt, single is $1250.
__________________

__________________
A totally unblemished life is only for saints.
frayne is offline   Reply With Quote
Old 03-19-2012, 07:42 AM   #3
Recycles dryer sheets
Aeowyn's Avatar
 
Join Date: Jan 2011
Location: Scotts Hill, TN
Posts: 105
How much depends on what is taxable. If it were just the actual divided distributions from mutual funds, then we would be under the $2500 exclusion. If it is divided + short term gain distributions reported in 1099-DIV, then we are just barely over the exclusion. If it is dividend + short term capital gain + long term capital gain distributions that get reported in 1099-DIV 1a + 2, then I am definitely over. If it happens to include capital gains that I triggered based on the sale of mutual funds in taxable accounts, then I am way over.

The bulk of what is in 1099-DIV is from one fund that at the end of the year paid huge capital gain distributions.
__________________
Quit my J.O.B to become a farmer/rancher - December 2011
Now working part time from home on contract to support prior employer.
Aeowyn is offline   Reply With Quote
Old 03-19-2012, 07:53 AM   #4
Recycles dryer sheets
Aeowyn's Avatar
 
Join Date: Jan 2011
Location: Scotts Hill, TN
Posts: 105
frayne, I've read through the tax guide you linked to before, this is how it words what I'm trying to figure out:

Income from investment trusts and mutual funds, including capital gain distributions and distributions designated as “nontaxable” under federal income tax law, whether in cash or additional stock, is taxable.

Do does TN treat mutual fund capital gain "distributions" different than mutual fund capital gains realized from selling shares? It also doesn't specify if it includes both short term and long term distributions so could be both. But since it is under "dividend income" - I thought it might just be short term dividends since the 1099-DIVs classify short term distributions in with the dividends.

In other words, I could read that as Dividends include short term gain distributions that are included in 1099-DIV box 1a, Divided distributions.
__________________
Quit my J.O.B to become a farmer/rancher - December 2011
Now working part time from home on contract to support prior employer.
Aeowyn is offline   Reply With Quote
Old 03-19-2012, 11:30 AM   #5
Recycles dryer sheets
fisherman's Avatar
 
Join Date: Jul 2007
Posts: 478
Tennessee does have the HAL Income tax. The limits above are referring to this tax. Search for HAL Income tax for forms and guidelines for paying it.

Welcome to Tennessee!
__________________
Worked the plan and now living the Dream!
fisherman is offline   Reply With Quote
Old 03-23-2012, 06:53 PM   #6
Recycles dryer sheets
Aeowyn's Avatar
 
Join Date: Jan 2011
Location: Scotts Hill, TN
Posts: 105
For what it is worth - I hired my taxes done this year (for the first year ever) due to the complication factor. The software that the person doing my taxes uses put the 1099-Div 1a and 2a as taxable in TN. The capital gains that I realized from selling mutual funds were not taxable (1099-B).

So it appears that all distributions that get passed from the mutual fund to share holders (dividends and capital gains) are taxable in TN. This is a little inconsistent since if I had owned the stocks in the mutual fund directly and sold in the proportion that the manger of the mutual fund did, I would only have to pay tax on dividends and not the capital gains.
__________________

__________________
Quit my J.O.B to become a farmer/rancher - December 2011
Now working part time from home on contract to support prior employer.
Aeowyn is offline   Reply With Quote
Reply

Tags
dividends, mutual funds, tax, tennessee


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
How Should We Think About College Savings? David. Young Dreamers 65 07-14-2012 03:01 PM
Roth IRA catch-up contribution question chessknt FIRE and Money 8 05-22-2012 11:57 PM
Do you see your neighborhood differently now that you're there all the time? Tree-dweller Life after FIRE 57 03-26-2012 05:42 PM
DIY Tax Return - Jumping into the deep end of the pool Lisa99 FIRE and Money 30 03-18-2012 01:34 PM
Another ROTH question BTravlin FIRE and Money 19 03-18-2012 11:28 AM

 

 
All times are GMT -6. The time now is 03:03 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.