Putting together a dividend tax theory to match a buy-and-hold investment strategy is much complicated by shifting tax laws.<\/p>\n
Types<\/strong><\/span> Significance<\/strong><\/span> Considerations<\/strong><\/span> Changes<\/strong><\/span> Source : ehow.com<\/p>\n","protected":false},"excerpt":{"rendered":" Putting together a dividend tax theory to match a buy-and-hold investment strategy is much complicated by shifting tax laws. Types If you have held a stock for 60 days, dividends paid from the profits of a domestic publicly traded company are “qualified” dividends and currently are taxed at a maximum 15 percent, which is lower […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[1],"tags":[518,2453,2949,3400,2111,3399,3401],"class_list":{"0":"post-1086","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-general","7":"tag-dividend-policy","8":"tag-dividends","9":"tag-reit","10":"tag-reits-bonds","11":"tag-tax-exemptions","12":"tag-tax-rebates","13":"tag-tax-theory","14":"entry"},"_links":{"self":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/1086","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/comments?post=1086"}],"version-history":[{"count":0,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/posts\/1086\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/media?parent=1086"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/categories?post=1086"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.niftylivecharts.com\/blog\/wp-json\/wp\/v2\/tags?post=1086"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
\nIf you have held a stock for 60 days, dividends paid from the profits of a domestic publicly traded company are “qualified” dividends and currently are taxed at a maximum 15 percent, which is lower than the marginal tax rate for most investors. All other dividends are “non-qualified” or “ordinary,” and they are taxed as ordinary income at the investment owner’s tax rate.
\n
\nSources<\/strong><\/span>
\nQualified dividends come not only from the shares of publicly traded companies but also from stock-holding mutual funds. Non-qualified dividends come primarily from shares of Real Estate Investment Trusts (REITs) and mutual funds holding bonds or REITs in their portfolios. Dividends paid from mutual funds holding tax-free bonds are not factored in to the account owner’s adjusted gross income (AGI).<\/p>\n
\nBecause qualified dividends (as well as long-term capital gains) are taxed at a rate lower than most investors’ marginal rates, investments yielding qualified dividends are more suited to be held outside of tax-deferred plans, such as 401(k) or IRA accounts. This is also true of investments paying tax-free dividends.<\/p>\n
\nAny investments yielding non-qualified dividends are best held in a tax-deferred account so the taxes will be paid in retirement, when the owner is likely to have dropped into a lower marginal tax bracket.<\/p>\n
\nBeginning in 2011, all dividends will be taxed as ordinary income for all taxpayers, which will remove any advantage of holding stocks in taxable accounts.
\n
\nReminder<\/strong><\/span>
\nEven if you reinvest your dividends from stocks or mutual funds, you still must pay taxes on the dividend the year it is paid, unless the investment is held in a tax-deferred or tax-protected account.<\/p>\n