I live in Illinois and was wondering the following. I am planning on quitting my job this year, and live off only dividends I receive from stocks. What type of tax bracket would I be looking to pay at the end of the year? Obviously these stocks will be held for more than a year, since I live off the dividends.
2007-02-07 15:32:24 · 4 answers · asked by angryviper 1 in Business & Finance ➔ Taxes ➔ United States
What if I do not work anymore and my dividend income is my only income?
2007-02-07 15:43:09 · update #1
Bascially planning on purchasing 200,000 or so shares which pay a monthly dividend of 0.065 cents per month. If that is my only income, I pay only 5% at the end of the year?
2007-02-07 16:09:37 · update #2
Dividends from most stocks are taxed at the same rate as long-term capital gains. If your AGI would put you in the 15% bracket or lower for ordinary income, your dividend income is taxed at 5%. If your AGI would put you in a higher tax bracket, your tax on dividend income would be a maximum of 15%.
2007-02-07 15:43:53 · answer #1 · answered by ninasgramma 7 · 0⤊ 2⤋
Cash dividends are taxed as ordinary income, which is your marginal tax rate based on your taxable income. Some dividends are paid out as capital gain distributions. These are taxed as long term capital gains, so there are beneficial tax rates for that. However, dividends from stock ownership is generally very small, so in order for you to "live off" of dividend income, you would need quite a bit of stock. I would think you would get a greater annual return on your investment from just investing in interest bearing assets rather than stocks, unless you plan on selling stock over time and living off of the sales proceeds.
2007-02-07 15:54:34 · answer #2 · answered by jseah114 6 · 0⤊ 0⤋
Dividends are taxed as ordinary income. Your tax bracket would depend upon your total income.
Addendum: You would pay tax on the dividend income. Since your income would probably be lower now that you are not working your income would be lower, but cash dividends on stocks are taxed as ordinary income.
2007-02-07 15:41:00 · answer #3 · answered by Bostonian In MO 7 · 0⤊ 0⤋
area 10 lists countless earning that are exempt from tax and which at the instantaneous are to not be blanketed interior the earnings for taxation less than the earnings-tax Act. area 10 (33) contains- dividend from Indian organizations, earnings from instruments of Unit trust of India and Mutual money, and earnings from mission Capital business enterprise/fund. hence there is not any Tax implication on dividend from a private business enterprise in India. delight on your tax loose earnings.
2016-11-26 01:37:08 · answer #4 · answered by ? 4 · 0⤊ 0⤋