Dividend tax question

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
hoops777
Posts: 3679
Joined: Sun Apr 10, 2011 12:23 pm

Dividend tax question

Post by hoops777 »

Using simple rounded numbers.
Say top of 12 pct bracket is 80,000 for married.
Taxable income is 85,000, so 5000 over 12 pct bracket.
How would 3000 of qualified dividends be taxed.
Thanks
K.I.S.S........so easy to say so difficult to do.
brawlrats
Posts: 49
Joined: Thu Dec 02, 2021 1:06 pm

Re: Dividend tax question

Post by brawlrats »

15% assuming all qualified dividends. QDs and LTCGs stack on top of ordinary income.

If you were able to get your ordinary taxable income below $80,000, the difference up to the top of the 12% bracket would be taxed at 0% for QDs and LTCGs.
livesoft
Posts: 78761
Joined: Thu Mar 01, 2007 8:00 pm

Re: Dividend tax question

Post by livesoft »

It can be complicated because it will depend on what other income and credits get affected. The only way to know for your particular situation is to do a mock tax return.
Wiki This signature message sponsored by sscritic: Learn to fish.
Topic Author
hoops777
Posts: 3679
Joined: Sun Apr 10, 2011 12:23 pm

Re: Dividend tax question

Post by hoops777 »

brawlrats wrote: Thu Jan 13, 2022 4:08 pm 15% assuming all qualified dividends. QDs and LTCGs stack on top of ordinary income.

If you were able to get your ordinary taxable income below $80,000, the difference up to the top of the 12% bracket would be taxed at 0% for QDs and LTCGs.
So the max is 15% of the 5000 amount above the 12 % bracket or $750 in this example.
K.I.S.S........so easy to say so difficult to do.
MrJedi
Posts: 1532
Joined: Wed May 06, 2020 11:42 am

Re: Dividend tax question

Post by MrJedi »

Assuming 0% LTCG/QCD also stops at 80k, then all 3k QCD is taxed at 15%.
brawlrats
Posts: 49
Joined: Thu Dec 02, 2021 1:06 pm

Re: Dividend tax question

Post by brawlrats »

hoops777 wrote: Thu Jan 13, 2022 4:24 pm
brawlrats wrote: Thu Jan 13, 2022 4:08 pm 15% assuming all qualified dividends. QDs and LTCGs stack on top of ordinary income.

If you were able to get your ordinary taxable income below $80,000, the difference up to the top of the 12% bracket would be taxed at 0% for QDs and LTCGs.
So the max is 15% of the 5000 amount above the 12 % bracket or $750 in this example.
$82k would be taxed using the normal tax tables, so $2,000 of your $5,000 over the 12% bracket would be taxed at 22% and the other $3,000 at 15%.
Hyperchicken
Posts: 961
Joined: Mon Mar 02, 2020 5:33 pm

Re: Dividend tax question

Post by Hyperchicken »

A picture worth a thousand words:

https://engaging-data.com/tax-brackets/ ... 00&cg=3000

$3,000 of qualified dividends is in 15% LT CG bracket, so tax = 3000*.15 = $450.
Topic Author
hoops777
Posts: 3679
Joined: Sun Apr 10, 2011 12:23 pm

Re: Dividend tax question

Post by hoops777 »

Thanks to all.
K.I.S.S........so easy to say so difficult to do.
Post Reply