Q. Do you have to pay taxes on ordinary dividends, from an International Index Fund, if your income is below the standard deduction?
A. No. More accurately, because your total income is below the filing threshold (which is the amount of your standard deduction, assuming you are not somebody else's dependent), you do not need to file a tax return. Even if you do file a return, your taxable income would be zero, so no tax is due. That is, no piece of income (i.e. foreign stock dividends) are taxed in isolation. They are added to your other income to determine your taxable income.
Q. I read somewhere online that ordinary dividends don't qualify for any tax deductions. What does that mean?
A. The wording isn't correct. It's not deductions that they don't qualify for, it's special tax treatment. Qualified dividends are taxed as long term capital gains. So, ordinary dividends, like all income, qualify for the standard deduction*.
*Dependents are subject to a modified standard deduction, where unearned income (e.g. dividends, ordinary or qualified) are effectively not allowed as a deduction.
