Your Dividend Tax Rates! 3 EXAMPLES! (Calculate Tax On Your Qualified Dividends Like a Pro)

Dividend tax rates can be tricky to calculate which is why we are presenting three examples using REAL tax forms to help you. Calculating tax on your qualified dividends will help you project your tax bill before it arrives.
Learn how capital gain rates work around qualified dividends and understanding taxes around these investments like never before.
Here is the link to the capital gain tax worksheet shown in the video: apps.irs.gov/a...
Time stamps so you can jump to any section of the video
1:34 Example 1 - When you dividends are taxed 0%
7:28 Example 2 - When your dividends are taxed 15%
8:15 Reporting dividends for taxes (tips)
11:58 Example 3 - When your dividends are taxed at 23.8% For the rich folk
How much I make per month from dividend investments : • Our Dividend Income Gr...
How to build a quality monthly dividend income portfolio: • Building A Quality Mon...
10 Stock Analysis Tips Before Choosing an Investment: • 10 Quick Stock Analysi...
Why Dividends Destroy Wages: • Taxation of Dividend I...
Building a lucrative portfolio of dividend producing assets is easier than one may think.
To learn the differences between investments accounts follow this link: • Which Investment Accou...
Our complete investing library can be found here:
Stock Market Investing: goo.gl/hi2kK4

[@EricSneed9204]

I just sold a property in Portland and I'm thinking of putting the cash in stocks, I know everyone is saying it's ripe enough, but Is this a good time to buy stocks? How long until a full recovery? How are other people in the same market raking in over $200k gains with months, I'm really just confused at this point.

[@nuraahmadumar8937]

Yes, a good number of folks are raking in huge 6 figure gains in this downtrend, but such strategies are mostly successfully executed by folks with in-depth market knowledge.

[@EricSneed9204]

@@nuraahmadumar8937 It all depends on how long you're willing to hold for, stocks might likely tank further, but making serious gains in this downtrend wouldn't be a problem if you're a pro.

[@nuraahmadumar8937]

@@EricSneed9204 The reason I decided to work closely with a brokerage adviser ever since the market got really tense and the pressure became so much(I should be retiring in 17months) so I've had a brokerage adviser guide me through the chaos, its been 9months and counting and I've made approx. 650K net from all of my holdings.

[@EricSneed9204]

@@nuraahmadumar8937 How do I connect with her?

[@nuraahmadumar8937]

@@EricSneed9204 The decision on when to pick an Adviser is a very personal one. I take guidance from ‘Alice Marie Coraggio‘ to meet my growth goals and avoid mistakes, she's well-qualified and her page can be easily found on the net.

[@charlesnorvow]

Minute 12:10 is hilarious!!! the example guy goes from working for McDonald's to owning the franchise store!

[@CaedenV]

Dude... This was so extremely helpful! On so many finance websites it implied that if your earned income was under $80k (married) then all dividend taxes were free and I was like... That can't be right, I've got to be missing something... And I was. In taxes, as in life, if it seems too good to be true, then it probably is.

[@MoneyandLifeTV]

Happy to hear you enjoyed the video :)

[@PeterPyo]

of course i dont know what videos youre talking about, but EVERY KZbin video i have seen has made it very clear that they were talking about this working if your ONLY source of income was dividends, and you stayed under your bracket income limits, THEN it would be tax free. the idea is, you build up a large enough portfolio, then retire and not work a W2 job and just live tax free on the dividends and capital gains.

[@MoneyandLifeTV]

How much I make per month from dividend investments : kzbin.info/www/bejne/pqHan4d9jLOWi7s How to build a quality monthly dividend income portfolio: kzbin.info/www/bejne/nqqpqouAmLGVd68 10 Stock Analysis Tips Before Choosing an Investment: kzbin.info/www/bejne/j2akcp15baikhqM Why Dividends Destroy Wages: kzbin.info/www/bejne/emO7gXyrnsl0nqs Building a lucrative portfolio of dividend producing assets is easier than one may think. To learn the differences between investments accounts follow this link: kzbin.info/www/bejne/fKC6q6CAqZqAaaM Our complete investing library can be found here: Stock Market Investing: goo.gl/hi2kK4

[@MoneyandLifeTV]

Hope everyone is having a blessed Memorial weekend. Thank you to all who have served. I'm pleased to be able to bring this video to you. It was fun, and educational to develop. I appreciate the additional likes, comments, and shares to keep this community growing. Couldn't do this without your support. Remember "Ordinary dividends" are taxed at your marginal tax rate just like wages, interest, etc @ 10%, 22%, 24%, etc. Dividend tax rates can be tricky to calculate which is why we are presenting three examples using REAL tax forms to help you. Calculating tax on your qualified dividends will help you project your tax bill before it arrives. Learn how capital gain rates work around qualified dividends and understanding taxes around these investments like never before. Here is the link to the capital gain tax worksheet shown in the video: apps.irs.gov/app/vita/content/globalmedia/capital_gain_tax_worksheet_1040i.pdf

[@harrymartin8019]

I need to apologize buddy for my disparaging comment i just made on your video "Taxation on your dividends vs wages". My comment was based on the fact that u didn't show any of the work from the worksheet. Well i went to your library and found this one! This is exactly what I needed!!!! PS Covid crash enabled me to finally make my retirement move into purchasing my watch list of Dividend Kings & Aristocrats one yr. before retirement while sitting on 44% cash position for years. So finding this video was my homework assignment. Thanks

[@MoneyandLifeTV]

Awesome, glad you found found this video :)

[@0mar9]

When I make it to the top I will hire you to do my tax

[@MoneyandLifeTV]

Haha thanks boss. You make you me feel honored.

[@leonareyna581]

Thats how I feel every time I watch his videos! Haha

[@kinglionheart50]

Thank you talking about the Net Investment Income Tax. Never even heard of it before. While I am still a ways off from $200,000, it is good to know about it if I ever reach those income heights. Now I just have to remember the tax when that happens.

[@kenlynch6332]

Very interesting; and even better when I can understand the process. 👍👍👍👍👍👍

[@MoneyandLifeTV]

Excellent Ken. Really glad this clears a lot of things up. It sure did for me when I was putting these together. Also highlights how much I hate the net investment income tax. :)

[@mameerali]

This was a fantastic video thank you so much you finally clarified that the dividend tax schedule considers all sources of income and not simply dividend income in isolation. THANK YOU!!

[@MoneyandLifeTV]

Awesome, glad you found it helpful :)

[@jadenardini7736]

Thank you so much your good videos. I love all your videos.Using the real tax form is very help me understand the concept. You are great teacher.

[@MoneyandLifeTV]

You're very welcome! I figure using the real tax form is the best way for people to learn, including myself. At the end of the day that is where the numbers fall :)

[@shakimwhite5792]

This was really good and easy to understand. Great teaching

[@MoneyandLifeTV]

Time stamps so you can jump to any section of the video 1:34 Example 1 - When you dividends are taxed 0% 7:28 Example 2 - When your dividends are taxed 15% 8:15 Reporting dividends for taxes (tips) 11:58 Example 3 - When your dividends are taxed at 23.8% For the rich folk

[@strangergranger10]

Sir, do you have a video like this talking about short term capital gains and non qualified dividends such as REITS??? I would love to learn more. Thanks.

[@susiekelly4322]

Thanks for explaining the form for dividends,

[@MoneyandLifeTV]

Our pleasure Susie. Thanks for providing the dog picture.

[@harryallenpearce89]

This was so informative. I could save on taxes with a Roth 401k, but since I’m buy and hold, the dividends are not going to be taxed until I build a really large nest egg. Then, it will not be taxed much, but I will have full control, whereas a Roth 401k I’m forced to sell at 72, 25% on average. In the long run, after 72, I’d be forced to invest this way anyway.

[@ntr6450]

I found a lot of value in this great video. Can you do a similar taxation video with rental property income included?

[@MoneyandLifeTV]

Great suggestion! I'll certainly consider it. I will be doing more real estate taxation vids in the future. Especially during tax time.

[@PassiveIncomeTom]

*Great examples Mike!* 👍

[@MoneyandLifeTV]

Thanks Tom! I wanted to show how different the calculations turn out at each income level. This video was educational to say the least.

[@nickv4073]

I admire Chipper the Cockatiel for protecting his SS number.

[@dipaknadkarni62]

So, like income, are the 3 dividend categories graded. ie, You can actually in all 3 taxes on dividends as you hit each income level.

[@stangtrax]

Appreciate the breakdown.

[@clintcollins81]

Keep them coming.

[@MoneyandLifeTV]

Will do thanks Clint!

[@teambigv]

Informative as usual

[@MoneyandLifeTV]

Thanks again! I try.

[@juanorellana1296]

Do you still have to pay taxes if you never take the dividend out and just reinvest it?

[@Kate-C]

Another great video!!Thank you. possible to have a simple example of a rental property like tax on a single house, condos?

[@MoneyandLifeTV]

Hi Kate! Great suggestion!I've been lagging on doing a real estate video, I will make this the next tax/real estate topic I produce. I can easily put something together with the resources I already have. Look for that video in June.

[@bobbylehrer1723]

Now your dividend income gets taxed even if you reinvest it back into other stocks or have a drip account correct? Or so that's how I am understanding it. Great video by the way.

[@MoneyandLifeTV]

You are correct Bobby. Whether you reinvest it or not it is subject to tax because the IRS views the dividend payment as constructive receipt of the money/dividend. Really glad you enjoyed the video. More to come like this :)

[@michaelwoodruff5792]

Great video Mike (& Chipper). In another video, you said that qualified dividends and ordinary dividends are different, therefore taxed differently. However, I noticed in this video that all the forms, worksheets, and spreadsheets showed both the qualified and ordinary dividend as the same amount. Which is it because I'm more confused now than ever

[@paulstrube8692]

Yes, how the author presented this is confusing, there are errors in his calculations. It appears that he should NOT have put $25,000 on the ORDINARY Dividends line -- because his "Total Income" is only $60,000 which has to be $35,000 + $25,000 = $60,000, not $35,000 + $25,000 + $25,000 which would be $85,000.

[@VOGASforVeinOfGoldAndSilver]

Liked, commented and added to my watching later list. If I have my dividends' settings setup to be automatically reinvented in the same stock and I don't sell the stock Do I have to pay every single year those taxes??? Thanks a lot for the video. I have been trading successfully, but I don't know anything about tax. 🤝🤗🤝

[@MoneyandLifeTV]

Hi Vogas! Great question. The answer is yes, you would pay tax on those reinvested dividends If they are withheld in a taxable brokerage account. Every single year. If they are within a Roth than no tax will be generated.

[@MrMainmoon]

Can you also make videos include ordinary dividends?

[@jasonlin9311]

Does having a Roth IRA affect the eligibility of getting Medicaid?

[@ketocutie2981]

Great video!

[@Rosa-pw7gl]

Thanks. I have a question, are these ranges applied to foreign investors? I read somewhere that they are taxed 30, but I am not really sure if there is anything else I need to know.

[@MoneyandLifeTV]

Hi Rosa, if you are US resident then US tax laws apply. If you not a US resident then it would follow the tax laws of the country where you reside. Any foreign taxes you pay on your investments in the US would receive a foreign tax credit so you are not double taxed.

[@Rosa-pw7gl]

@@MoneyandLifeTV thanks a lot! I really appreciate it.

[@zac2641]

Thanks for the great video! I learned a lot and will be making some adjustments to my portfolio based on what I have learned. Currently, does Roth income drop the 0% dividend tax threshold the same way traditional IRA income does?

[@MoneyandLifeTV]

Hi Zac, yes, it does. In Roth everything is treated as "ordinary income" including dividends however, since they come out tax free everything is taxed at 0%. Where as with a traditional IRA everything would be reportable ordinary income at time of distribution.

[@tone33012]

How can I find out if my Dividends are qualified or Ordinary? Is there a website to check! I googled it but no results. :(. Thanks liked and subbed already.

[@MoneyandLifeTV]

Hi Tone, great question. The easiest way to check is look at your brokerage statements in your account. Most stocks/etfs can throw off qualified dividends after you've held it long enough (Usually 60 days roughly). I have a whole video that details out how to get qualified dividends here: kzbin.info/www/bejne/j568lKt6gd-Lr7s Hope that helps :)

[@robertostapleton93]

Thank you 😊

[@MoneyandLifeTV]

You're welcome Roberto 😊 thanks for the support boss.

[@BBurgDave]

If I have both Qualified Dividends and Capital Gains, are they treated separately to calculate the tax on each, or are they combined together into one "pile" to consider them in combination with ordinary income? If it's the former, it would likely result in a lower combined tax than the latter, hence my question.

[@amherst2013]

Hi Mike I have 2 questions for you. 1. How are canadian stock dividend work such as TD extra tax?

[@dianamir4901]

Great video! Do you invest in Bonds ETF or Index funds?

[@MoneyandLifeTV]

Hi Diana, both actually. The body fund I invest in for long-term is EDV, the bond fund for short-term is VCSH ( Vanguard short-term bond fund).

[@berthanava9269]

hope some one can help me, or can you explain how to calculate number 24. and number 26 using tax table to figure the tax

[@mikeshlyak5267]

Great video and very helpful at the federal level! I was wondering, are dividends taxed at the state level in a similar fashion or does it depend on how each state has set up their "tax rules?" For example, some states have no income tax while others have a flat or progressive tax system, so would qualified/non-qualified dividends work in a completely different way at the state level? I've been trying to do my own research on this and was hoping for any guidance or help because the filling information is vague, thanks!!!

[@MoneyandLifeTV]

Great question Mike. Dividends are taxed by each state based on that state's tax laws. For example in Cali where I live dividends are taxed as ordinary income. Which sucks, but the state tax rates are lower than Fed so it balances out. Where as they may not be taxed at all in a state like Texas (however I'm not 100% sure without looking it up myself haha).

[@mikeshlyak5267]

@@MoneyandLifeTV Thank you for the fast reply! Definitely subbing for that! Ouch, Cali taxes are BRUTAL, and that's really unfortunate that dividends are classified as ordinary. I guess one strategy to "offset" the tax burden would be to contribute more into a traditional 401k/403b or any other tax-exempt account, like a HSA, and to continue this pattern. It's almost feels as if the dividends are replacing a salary as you accumulate for retirement.

[@johnl4235]

what about state taxes?

[@Ineedanumberattheend]

Love the video. So I had a question, does the dividend income itself count towards the dividend tax bracket? For example say i'm married and the cap is $80000 in income to not pay taxes on dividends. We made $75000 through working jobs and $10000 in dividends. Would the income calculation use the sum of the two incomes ($85000) and therefore disqualify you from the 0% tax rate for the dividends, would it not count the dividend income itself it all so you wouldnt be taxed on any of the dividends, or would the 0% rate only apply for half the dividend because normal income $75000 plus half the dividends $5000 would put you at the $80000 cap for the 0% tax rate on dividends. I hope that question made sense thanks for your time!

[@MoneyandLifeTV]

Hey there Ineedanumberatthend, I think I understand your question. So in your example that would be a 175K in income less 24,400 standard deduction = $150,600 taxable income. I would have to look at the capital gain worksheet to figure out the rest, but if I back out the dividends of 100K from that amount I would estimate that about 30K of your dividends are taxed at 0% the other 70K is taxed at 15%. Hope that helps.

[@eddiemartinez9092]

Great Vid! I somewhat disagree... The final example proves "high earners" pay a lot in taxes. But wouldn't a "wealthy" person with $400,000 in dividend income and $50,000 in earned income pay a fraction of the tax?

[@MoneyandLifeTV]

Hi Eddie, thanks for asking. Yes, I believe you are correct if that were the situation. Although very rarely seen. To have a dividend income of $400,000 they would need $10mil to $20 million in dividend paying investments. Extremely rare but possible.

[@thesweatreliefcompany2512]

Are retirement funds held in an employer's retirement account on my behalf included as regular income but, if I took that same amount of money every year while working and bought stock annually, and then when I am retired, I sold some stock annually to survive, I would pay capital gains rate?

[@big0514]

Would you honestly say it is worth getting into dividend investing? Most of us would hit the 15% range at most. It just seems like yes you pay but You always pay taxes but overall you win. I started investing cause everyone online made it sound good I didn’t even think about taxes on it. Just curious to hear someone’s response on it. Because win the long run I would like some extra money maybe even retire early so I’m just curious on opinions?

[@ivanthelion2829]

That's what I wanna know too, I have prospect capital and love the monthly dividend it motivates me to keep investing more and build that future passive income but the tax part kinda worries me however I'm also in the low tax bracket 40,000 yearly I'll see in 2 years if I paid alot if so ill just sell it and put it on qualified stock companies dividends

[@big0514]

@@ivanthelion2829 if you have 40k a Roth IRA is the way to go all capital and dividends are tax free growth. Plus after 5 years what you put in you can take out penalty free. Negative is it limits you at 6k. But a individual brokerage is good to have to once you contribute the 6k. One guy said etf are good in individual accounts high growth but low dividends. From my understanding on the taxes, once you get to your 4% it’s a manipulation of how you pay your taxes. It’s determined off how much you can live on. Like in my case I want to move to a place with lower taxes and cheaper quality of life. That way the $80,800 that is tax free will be taxed at $0 and I can still live comfortable. Like if you can’t live off the 80,800 then you will pay 15% but it’s still lower than the regular tax rate people working pay. There’s even ways to manipulate it to where once you get to 4% you can work part time and keep your pay lower enough mixed in with your investments to also pay 0% on taxes. And you burn less of your investments. I don’t totally get it 100% but while I’m working I understand how to avoid some of the taxes now. But I can pay the taxes and some of my tax return will balance it out for now.

[@ivanthelion2829]

Big A thank you for that I have a regular 401k but my job has it with Merrill lynch, but I want to switch to m1 finance or fidelity. But dont wanna pay the penalty to rollover. The plus I already live in a comparable area and house all paid. Yeah investing just seems smart right now as well as long term. I love dividends cuz it motivates me to keep doing what I'm doing

[@big0514]

@@ivanthelion2829 kzbin.info/www/bejne/g6fafYqAo9F7oZI I found this video helpful. Honestly I’m no stock/tax genius. Just a guy trying to figure it out like the rest of us. But from what I’ve learned so far is just keep learning and investing. As long as you aggressively apply the learning and consistently invest it will click

[@MrBraceface216]

Does it automatically get taxed in a taxable account, or do you just have to pay taxes on all of your dividend returns when tax season comes🤔 Like would you end up OWING taxes when you file your taxes, as opposed to receiving a tax return?

[@dizzlefreedom1665]

Hi Mike, I have a question. How are unqualified/Ordinary dividends taxed in Roth IRA? Are the withdrawals tax free just like Qualified Dividend Income?

[@modernfinancialplanning]

Roth IRA withdrawals are tax free so you don’t get taxed on any type of dividend if it’s in a Roth account.

[@jasminpg2003]

If you file married with 24k standard deduction and you make only 24k with REITs divident would you still pay 0$? And if u add kids would that deduct even more? In this case non qualify with higher yield make more sense.

[@MoneyandLifeTV]

Hi Jaki, great question. In that specific instance yes you would pay $0. However, your income would literally have to be $24,000 exactly. Anything above would cause you to pay tax. The higher your income is from other sources the more qualified dividends help. REITs are best served in a Roth IRA whereby you can receive the higher yields and pay no tax.

[@ntr6450]

Great video thanks! What about taxation on foreign REITs such as Canadian RIOCF? Other than the 15% withholding tax which is taken directly from the monthly dividend payment will I be taxed once again by the US government on the same dividend?

[@MoneyandLifeTV]

Good question! NTR6, If you are receive foreign income there is a thing called a foreign tax credit which should apply when you are filing your taxes to offset the double taxation.

[@MoneyandLifeTV]

Most people's foreign income is very small, but when you receive your 1099-B look for foreign income and foreign taxes. I'm going to be doing a 1099-B walk through for tax filing so once I produce that video it will make more sense.

[@ntr6450]

Money and Life TV yes I believe it is only $300. How would taxation work if my dividend income number were much larger than $300?

[@MoneyandLifeTV]

You would essentially just get a larger foreign tax credit.

[@ntr6450]

Money and Life TV ok thanks I see. I was under the impression $300 was the foreign tax credit limit

[@jjsantana1817]

Great info, but say if i own amazon, fb, google, tesla shares ect. That dont pay out dividends would i still get taxed on those?

[@MoneyandLifeTV]

Hi JJ, good question. NO, not until you sale under the current tax laws.

[@bingbong3643]

How many dividend stocks can you put in your Roth RIA ?

[@MoneyandLifeTV]

As many as you can purchase to be honest. OF course limited by the amount of the contribution limits each year.

[@brokephibrokeinvesting6786]

So I'f Im retired and make nothing. But I get 50k in dividends I'll pay no taxes on that because it's qualified? Even though it's a high amount?

[@MoneyandLifeTV]

In a nut shell yes. Your standard deduction would take your total taxable income below $40k in that example so all of your income would essentially be tax free.

[@randycessna4403]

What about where you sold at a loss.

[@MoneyandLifeTV]

If sold at a loss you can deduct up to $3,000 of that loss per year.

[@sass1ap]

Once my ACAT is complete, I will have 2 different brokerages I work with. Is there any reason/benefit/drawbacks to have accounts with more than one brokerage ?

[@MoneyandLifeTV]

Great question. Not at all. The only downside is trying to keep track of multiple accounts.

[@sass1ap]

@@MoneyandLifeTV Great content in your videos, thank you. So in this instance, it sounds like it's ok to put all my eggs in one basket, so to speak. LOL

[@MoneyandLifeTV]

Haha, yes. I've helped clients with their taxes who have like 5 charles schwab accounts but very diverse investments in each account.

[@sass1ap]

@@MoneyandLifeTV Ahh gotcha. Yes, I just ACATed my Stash account to Schwab. Now I just have M1 and Schwab. I'll probably transfer the M1 over as well so it is all in one place. Thanks for the help, it is appreciated, and keep up the great content, I have gained a lot of knowledge from your vids :D

[@Tompham1111]

why does 0% capital tax shrinks as you earn more money?

[@MoneyandLifeTV]

Good question Tom. In a nut shell it is becuase the tax system is progressive. Which means the more money you make the more you pay in tax. That is why the rich pay the most in tax. As your income climbs less and less deductions are allowed to be taken. Also, long-term capital gains become taxable as well.

[@josephscott6642]

Most dividend stocks pay 4 times a year, so if you miss the ex dividend date do you get the rest of the dividends for the year ?

[@evettejohnson9556]

The person who held the stock before you getsit

[@TheMystcast]

just going to HR block, I have no patience for figuring this out.

[@jarc02]

I think you should have pointed out that some dividends may not be qualified and some will. It depends on the investment (e.g. REITs and ETFs) and length of time you held the investment. A more realistic example would be a mixture of non-qualified and qualified dividends.

[@MoneyandLifeTV]

Great points Jarc02, next time I produce a tax video around dividends I will be sure to cover that.

[@kukurei]

If you don't have earned income and 100k of qualified dividends, is your tax rate 0%?

[@MoneyandLifeTV]

That is correct. If you made $100K in dividends your tax rate would be 0.

[@jimmywatermelon357]

@@MoneyandLifeTV I’m the same situation, if you had $80,000 in W-2 income from your job would your qualified dividends still be tax free up to $80,000?

[@sarahthomas2303]

This was too all over the place. Please redo.

[@jimbrown4640]

The only people who get 0% capital gains rate are poor.