are qualified dividends taxable
Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. They should be shown in box 1b of the Form 1099-DIV you receive. The maximum rate of tax on qualified dividends is the following. 1  0% on any amount that otherwise would be taxed at a 10% or 15% rate. 2  15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39.6%. 3  20% on any amount that otherwise would be taxed at a 39.6% rate. If you receive over $1,500 of taxable ordinary dividends, you must report these dividends on Form 1040A or 1040, Schedule B (PDF), Interest and Ordinary Dividends. If you receive dividends in significant amounts, you may have to pay estimated tax to avoid a penalty. Basically, qualified dividends are ordinary dividends that meet specific requirement. If so, the qualified dividends are taxed at the same rate as long-term capital gains. That drops the qualified dividend tax rate down to 20%, 15%, or even 0% depending on your marginal tax rate, which you can find here: 0% if you fall into the 10% or 15% bracket. 15% if you fall into the 25% to 35% bracket. Corporations pay most dividends in cash. However, they may also pay them as stock of another corporation or as any other property. You also may receive distributions through your interest in a partnership, an estate, a trust, a subchapter S corporation, or from an association that's taxable as a corporation. If you claim a deduction for investment interest, you may have to reduce the amount of your qualified dividends that are eligible for the 0%, 15%, or 20% tax rate. Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. The tax rate for qualified dividends is determined by an individual’s ordinary income tax bracket. 1  For individuals whose tax brackets are 10% or 15%, there are no taxes on qualified dividends. 2  For individuals whose tax brackets are 25%–35%, the rate is 15%. 3  For individuals in the 39.6% tax bracket, the rate is 20 %. Distributions that qualify as a return of capital aren't dividends. A return of capital is a return of some or all of your investment in the stock of the company. A return of capital reduces the adjusted cost basis of your stock. For information on basis of assets, refer to Topic 703. Currently, ordinary dividends and short-term capital gains those on assets held less than a year are subject to one's income tax rate. However, qualified dividends and long-term capital gains benefit from a lower rate. For individuals whose tax brackets are 10% or 15%, there are no taxes on qualified dividends. For individuals whose tax brackets are 25%–35%, the rate is 15%. For individuals in the 39.6% tax bracket, the rate is 20%. For a dividend to be a qualified dividend: 1  The dividend must be paid by one of the following: a U.S. corporation (including mutual funds) a corporation incorporated in a U.S. possession. a foreign corporation located in a country that is eligible for benefits under a U.S. tax treaty that meets certain criteria.
Yes, qualified dividends are taxable.