Qualified Dividends are taxed differently than ordinary income. On your Form 1040 Wks, look between lines 15 and 16 - there is a Tax Smart Worksheet that will tell you if your tax was computed using the tax tables or another worksheet. Look for the X on that worksheet, which is part of your 1040 worksheet.
- Your “qualified” dividends may be taxed at 0% if your taxable income falls below $44,625 (if single or Married Filing Separately), $59,750 (if Head of Household), or $89,250 (if (Married Filing Jointly or qualifying widow/widower) (tax year 2023).
- Above those thresholds, the qualified dividend tax rate is 15%.
- The qualified dividend tax rate increases to 20% if your taxable income exceeds $276,925 (if Married Filing Separately), $492,300 (if single), $523,050 (if head of household) or $553,850 (if Married Filing Jointly or qualifying widow/widower) (tax year 2023).
- Non-qualified or “ordinary” dividends are taxed using the standard income tax brackets for tax year 2023.
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