chrispae
New Member

If qualified dividends, 1040 line 3a, are part of ordinary div, line 3b, why does it seem I'm paying regular tax on the qualified portion instead of lower cap gain rate?

For example, let's say my w-2 income is 145000, my ordinary div 3b line says 5000, then they are added and it seems my income is 150,000 total.  BUT, most of that ordinary dividend is qualified, so in line 3a it says 4800, but i dont see how that's taken into account as capital gains and the entire amount is viewed as ordinary dividend/income.  My understanding is that qualified dividends are a portion of ordinary dividends.