How does qualified dividends reduce my tax?

Posted by admin on April 4th, 2010

You are currently browsing comments. If you would like to return to the full story, you can read the full entry here: “How does qualified dividends reduce my tax?”.

Posted in Dividends Tags: qualified dividends, tax bracket, tax irs

« What is the best book to teach me about trading stocks?

Thai Insurance CM – “Daddy” with Eng sub »

Both comments and pings are currently closed.

One Response to “How does qualified dividends reduce my tax?”

1. ninasgramma says:

   April 4, 2010 at 5:11 am

   Income taxes are assessed on brackets of income. The first bracket is 10%, then 15%, then 25% and then higher. The brackets depend on the filing status.

   When a taxpayer has qualified dividends, if the taxpayer is still in the 10% or 15% bracket, the dividends are taxed at 5% and this tax is added to the tax on the rest of the income.

   If the taxpayer is in a bracket higher than 15%, then the qualified dividends are taxed at 15%, and this amount is added to the tax on the rest of the income.

   Because of the way tax on qualified dividends is figured, it cannot be in a table. A worksheet is used. The easiest way to handle it is with a software program or preparer.