The More You Make, The More They Take

How the IRS taxes your dividend payments [View in browser]( [The Juice Logo] BROUGHT TO YOU BY: [Logo]( Proprietary Data Insights Top Dividend-Paying Stock Searches This Month Rank Ticker Name Searches #1 [NVDA]( Nvidia 767,218 #2 [AAPL]( Apple 315,353 #3 [MSFT]( Microsoft 195,754 #4 [META]( Meta Platforms 117,896 #5 [INTC]( Intel 108,650 #ad [Beyond Traditional Investments: Embrace Diversity]( Brought to you by [Stock Earnings]( [Honor Their Sacrifice: Trade Like a Pro for Just $4]( [ Stock Earnings - Honor Their Sacrifice: Trade Like a Pro for Just $4]( This July 4th, we're honoring the founding fathers who fought for our independence in an unprecedented way. For the first time ever, we're offering 12 months of our Premium Membership for just $4. That's access to professional-grade trading tools and alerts for less than a cup of coffee. Don't miss this chance to upgrade your trading. The offer ends Thursday at midnight. [Click here to honor their sacrifice and secure your financial future]( The More You Make, The More They Take Because we’re heavy on education here at The Juice and because we have written a lot about dividends (stocks and ETFs) over the last few months, we figured it was time for a nice review and refresher. Everybody loves to talk about dividends, but nobody likes to talk about taxes. Understandable. However, it’s important to know how the Internal Revenue Service (IRS) will — or will not — tax your dividend payments. Before we get into that, a quick summary of some of our recent dividend-related installments: [Top 5 Most Popular Dividend ETFs]( [What Are Monthly Dividend Stocks?]( [What’s Inside The Most Popular Smart-Beta Dividend ETFs]( [Dividends Are Only Part Of A Retirement Income Strategy]( [What’s Inside The Top International Dividend ETFs]( [AI Growth Stock With A Solid Dividend?]( We’re building one heck of a personal finance and investing library around myriad subjects, including dividends. So, suggest to a friend that they subscribe to The Juice for free [using this link](. Dividends. Everybody loves them. But how does Uncle Sam treat them? Here’s the long and short of it. Dividend tax rates vary depending on your income tax bracket. The first thing you need to know are the two types of dividends: - Qualified dividends: You have held the stock for more than 60 days in the 121-day period that started 60 days prior to the ex-dividend date. A U.S. company or qualifying foreign entity pays the dividend. - Unqualified dividends: Dividends paid by [real estate investment trusts]( (REITs), master limited partnerships (MLPs), employee stock options and companies exempt from paying taxes. [Special, one-time dividends]( are also not qualified. Tax rates on qualified dividends are more favorable. As of the 2024 year, the rate is 0% on qualified dividends if your taxable income is under $47,025 for single filers and under $94,050 for married filing jointly taxpayers. So, yes, you can collect dividend income tax-free. If you earn more than $47,026 (single) or $94,051 (married filing jointly), you'll pay a 15% tax rate on qualified dividends. If your income exceeds $518,900 for a single person or $583,750 for a married couple, your dividend tax rate will be 20%. So, yes, the more you make, the more they take. Basically. If this sounds familiar, it might be because the IRS taxes qualified dividends at the capital gains tax rate. As for un or non-qualified dividends, we sometimes refer to them as ordinary dividends. Ordinary because the IRS taxes them like ordinary income, determined by your taxable income and subsequent tax bracket. #2 How Do You Pay Dividend Taxes? At the end of the year, along with your other tax forms, banks, brokerages and other institutions that paid you dividends during the year will send a 1099-DIV form. It includes the following information: - The payer of the dividends - The recipient of the dividends - The type and amount of dividends paid - Federal or state income taxes already withheld When you file taxes, the IRS asks about this form. Simply enter the information on your tax return and, from there, the IRS will work it into the equation to determine your overall tax due. If, for some reason, you didn’t receive a 1099-DIV, you still need to report your dividend income to the IRS. So, remember, the above-mentioned numbers are taxable income. If you lower your taxable income significantly through, for example, deductions you can potentially lower your dividend tax due, particularly if you’re near one of the thresholds. The income thresholds typically change each year in line with inflation. How about dividend payments from ETFs? Also, pretty straightforward. The IRS handles the dividend distributions that ETFs make the same way it does the dividend payments on your individual stocks. For example, on June 26, the Schwab U.S. Dividend Equity ETF (SCHD) made a $0.82 per share distribution. Whether you take that distribution as cash or reinvest it, you have to report it to the IRS as investment income. If you own a stock or ETF that pays a dividend inside a tax-advantageous vehicle, such as an IRA, it will play by the rules that govern the particular type of account. So, for example, in a Roth IRA, that income grows tax-free and you can withdraw it come retirement tax-free as long as you satisfy IRS rules. In a traditional IRA, that dividend income grows tax-deferred, but gets taxed, as part of the withdrawal, come retirement. [Biggest Prediction of My 50-Year Career on Wall Street]( Today, I'm going public with something I've never said on national air... not in any of my appearances on Fox Business or CNBC. I'm a little nervous about it... But I stand behind the big prediction I'm making right now... because I've never been more confident that a strange day I foresee coming to America could make you a great deal of money. Today, my newest prediction is even bigger. In fact, I'm going one step further. I'm giving away the ticker symbol of the #1 stock to buy now... using the same system that bears my name on every Bloomberg terminal on Wall Street. [Click here to learn the full details.]([Ad] The Bottom Line: That about covers it. If you have questions or would like to suggest another area we cover, please use the feedback link at the bottom of this page. But, just know, dividends are great and taxes probably shouldn’t be a deterrent from using them in your overall investing strategy. However, they can have tax consequences. [-facebook-share]( [-twitter-share]( [-linkedin-share]( [-email-share](mailto:?body= https%3A%2F%2Finvestingchannel.com%2F%3Fp%3D620862?utm_medium=ic-nl&utm_source=120127 ) News & Insights Freshly Squeezed - [2 Energy Dividend Stocks That Billionaires Are Buying]( - [Dive into Expert Picks - We Spill the Best Daily!]( - [8 Best Pot Stocks to Buy]( - [Check Out The Juice’s Favorite ETF Screener]( [News & Insights-facebook-share]( [News & Insights-twitter-share]( [News & Insights-linkedin-share]( [News & Insights-email-share](mailto:?body= https%3A%2F%2Finvestingchannel.com%2F%3Fp%3D620862?utm_medium=ic-nl&utm_source=120127 ) [We want to hear from you. 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