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From 2003 to 2007, qualified dividends were taxed at 15% or 5% depending on the individual's ordinary income tax bracket, and from 2008 to 2012, the tax rate on qualified dividends was reduced to 0% for taxpayers in the 10% and 15% ordinary income tax brackets, and starting in 2013 the rates on qualified dividends are 0%, 15% and 20%. The 20% ...
Qualified dividend status can save you a lot of money because you’ll only pay the long-term capital gains rate on those payouts, instead of the ordinary income tax rate. Ordinary Dividends
If the dividends you receive are classified as qualified dividends, you pay taxes on them at the capital gains rate. The capital gains rate is often lower than the tax rate on non-qualified or ...
The Capital Gains and Qualified Dividends Worksheet in the Form 1040 instructions specifies a calculation that treats both long-term capital gains and qualified dividends as though they were the last income received, then applies the preferential tax rate as shown in the above table. [5]
Ordinary Dividends vs. Qualified Dividends: The Background Before 2003, all dividends were ordinary dividends and recipients paid taxes on them at their usual individual marginal rate.
The qualified dividend tax rate was set to expire December 31, 2008; however, the Tax Increase Prevention and Reconciliation Act of 2005 (TIPRA) extended the lower tax rate through 2010 and further cut the tax rate on qualified dividends to 0% for individuals in the 10% and 15% income tax brackets.
Qualified dividends: These are dividends that are taxed at the capital gains tax rate (which is lower than the standard income tax rate). For a dividend to be considered a qualified payout, it ...
Earning dividends is a valuable source of income for investors, particularly those saving for retirement. The IRS allows qualified dividends to be taxed at a lower capital gains rate than the ...