Taxes on Dividends: Answers to 4 Key Questions

Dividends are one of my favorite things to collect. Even John D. Rockefeller understood the power of dividends. He has been quoted as saying, “Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.”

Buy a stock that pays a dividend, and a company pays you passive income every quarter in the U.S. and semi-annually in most other countries.

Why do Investors Love Dividends  So Much?

One of the most important is that dividends are a return of cash to an investor.

What is the Tax Rate on Dividends?

Dividend tax rates differ depending on whether the dividend is qualified or nonqualified, also known as ordinary. The difference in the tax rate can be dramatic depending on your income.

Can You Avoid Taxes on Dividends?

In general, the answer is no, but there are exceptions. Dividends are a type of income, so they are taxable.

What About Tax-Advantaged Accounts?

More people own a retirement account than a taxable brokerage account. Owning a retirement account is an advantage and a legitimate way to defer or avoid taxes on dividends.

Swipe up to learn more!