Dividend Income

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  • like interest income dividend income is not subject to social security and medicare taxes
  • often has lower income tax rates than other types of income
  • if it meets certain requirements it will be a "qualified dividend" which are taxed as follows (for 2019)
    • 0% if below $39k of taxable income (or $78k if married filing jointly)
    • 15% if above the 0% threshold but below $434k ($388 if married filing jointly)
    • 20% if above the 15% threshold

Example: You're single with $5k of qualified dividend income and excluding the dividend income your taxable income is $36k. The first $3k of qualified dividend income is tax free since till that amount your total taxable income is below $39k. The remaining $2k of qualified dividends will be taxed at 15%

  • Usually dividends from stocks you've held for at least 60 days are qualified dividends
  • Form 1099-DIV that your brokerage gives you will indicate which of your dividends are qualified so you don't need to figure it out yourself

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  • 16 days ago by vince