If your income includes dividends, this presents some special considerations at tax time.Dividends can be taxed either at ordinary income tax rates or at the preferred long-term capital gains tax rates.They were taxed at rates of 0, 15, or 20 percent through 2017, depending on your regular income tax bracket.
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But this holding period can be longer in the case of preferred stock.
These assets must be held for at least 91 days during a 181-day period that begins 90 days before the ex-dividend date.
The new 15 percent tax bracket kicks in and applies to incomes above the 0-percent thresholds up to $425,800 for single filers, $452,400 for head of household filers, and $479,000 for married filers of joint returns in 2018.
These long term rates remain the same in 2019, but the income thresholds for each have changed to keep pace with inflation.
Form 1099-DIV reports dividends information in the following places: The IRS has issued a new Form 10 which replaces the old 1040, Form 1040EZ, and Form 1040A. Forms 1040EZ and 1040A are no longer available beginning with the 2018 tax year—the return you'll file in 2019.
You must still report dividend income on your tax return even if for some reason you don't receive a Form 1099-DIV.The rates are still set at 0, 15, and 20 percent, but now long-term capital gains have their own tax brackets—at least through 2025 when the TCJA potentially expires.Beginning with the 2018 tax year, you'll fall into the 0 percent long term capital gains tax rate for qualified dividends if your income is ,600 or less if you're single, ,200 or less if you're married and you file a joint return with your spouse, or ,700 or less if you qualify as head of household.Paychex's Tom Hammond discusses common payroll considerations for CPA firms.If this is your first visit, be sure to check out the Welcome to Red Flag Forum. To start viewing messages, select the forum that you want to visit from the selection below.Dividends are still taxable and must still be reported if you reinvest them, purchasing additional stock.