If I make a dividend from my share of ABC company and just use it to buy more ABC will I have to pay the tax on the dividend?
What if I use my ABC dividend to buy XYZ stock?
BTW I think in a monarchy the serfs are really just held down by fear and ignorance, that's why I am an american, I'm not scared and I am always trying to uncover truth.
2007-03-02 14:07:45 · 7 answers · asked by Anonymous in Business & Finance ➔ Investing
Dividends are taxable as received, unless they are in a tax sheltered account such as an IRA or 401 K. If your dividends are in a regular brokerage account, they will be taxable in the year received, regardless of what you choose to do with the money- revinvest, buy something else, etc. .
2007-03-02 14:21:00 · answer #1 · answered by oakhill 6 · 2⤊ 0⤋
Michael C is totally wrong. The several others are somewhat wrong. In a tax deferred account (401k, traditional IRA) you will still EVENTUALLY have to pay taxes on the dividends, when you withdraw the funds, not in the year received. The only time where you do not have to pay the taxes is if the stock is in a ROTH IRA or one of the new ROTH 401k's.
2007-03-03 07:02:30 · answer #2 · answered by gosh137 6 · 1⤊ 1⤋
Yes, any dividends you receive are considered taxable income regardless of whether or not they are reinvested in the original company or elsewhere. The only nontaxable dividends that I know of are in tax free or tax-deferred accounts such as 401K's and IRA's.
2007-03-02 22:22:13 · answer #3 · answered by valet4u2 3 · 0⤊ 0⤋
Not if it is enrolled as a DRIP. Direct reinvestment something ,something. That's the easiet simplest way. Most brokerage houses offer this for free, you just have to do the paperwork, or in some cases just enroll online.
If you take the dividend in cash, sure you can buy XYZ . You will pay taxes on the sale from ABC. You used the PROFIT/INCOME money from ABC to buy XYZ. Until you do something with XYZ you have neither a loss to deduct or a gain to declare.
2007-03-02 22:22:17 · answer #4 · answered by Michael C 5 · 0⤊ 4⤋
You do pay taxes on dividends. It does not matter whether you roll them over or not, unless they are in a 401K plan.
If you do buy any stock, then you have to hold it a number of years or you pay taxes on the profits.
Philosophy does not count for much in the investment world.
2007-03-02 22:20:51 · answer #5 · answered by Anonymous · 0⤊ 2⤋
I'm pretty sure it's counted as income and therefore taxable. It's not like you took that 45 cents a share or whatever and got 1/234th of the stock.
2007-03-02 22:17:26 · answer #6 · answered by Modus Operandi 6 · 0⤊ 1⤋
Yes unless it is in a tax deferred retirement fund.
2007-03-02 22:30:13 · answer #7 · answered by DLeibowitz 5 · 1⤊ 2⤋