What are the tax benefits of dividend reinvestment?

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What are the tax benefits of dividend reinvestment?

2007-09-19 11:35:21 · 3 answers · asked by evomatic01 1 in Business & Finance ➔ Taxes ➔ United States

3 answers

None really. The dividends are taxed whether you reinvest them or take them in cash. Dividend reinvestment WILL improve your rate of return but won't normally help at tax time.

Ordinary dividends are taxed at your marginal rate. Qualified dividends are taxed as long-term capital gains, normally 15%.

2007-09-19 11:40:36 · answer #1 · answered by Bostonian In MO 7 · 1⤊ 0⤋

the tax benefits are on the dividends, not the reinvestments. Dividends are taxed at 15% federal, instead of at your nominal tax rate

2007-09-19 11:44:40 · answer #2 · answered by matthew h 2 · 0⤊ 1⤋

There aren't any. Dividends are still taxable, whether you reinvest them or take them as cash.

2007-09-19 14:35:15 · answer #3 · answered by Judy 7 · 0⤊ 0⤋