Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
jeffbest1*
New Member

Does my dividend and long term capital gains income count towards my ordinary income? If no and my ordinary income $0, what will my dividend and capital gain tax %'s be?

 
6 Replies
DJS
Level 7
Level 7

Does my dividend and long term capital gains income count towards my ordinary income? If no and my ordinary income $0, what will my dividend and capital gain tax %'s be?

First, capital gains are included in the calculation of AGI, so depending on the amount  you may still pay tax on your capital gains even if you have no other income. 

 

Your gross income includes everything you earned from: Alimony, Business income, Capital gains, Dividends, Interest, Farm income, Rental and royalty income, Retirement income, Tips, Wages.

 

Your adjusted gross income is equal to your gross income, less certain tax-deductible expenses.

 

The tax rate for long-term gains depends on your income and filing status. 

Long-term, capital gains tax brackets as of 2019 are:

 
Tax Rate: Single Taxpayers Married Filing Jointly Heads of Household
0% $0 - $39,375 $0 - $78,750 $0 - $52,570
15% $39,376 - $434,550 $78,751 - $488,850 $52,571 - $461,700
20% $434,551 or more $488,851 or more $461,701 or more

 

Qualified dividends are taxed at the long-term capital gains tax rate. 

Regular dividends are classified as either qualified or ordinary, each with different tax implications that impact an investor's net return. The tax rate on qualified dividends for investors that have ordinary income taxed at 10% or 12% is 0%. Those that pay income tax rates greater than 12% and up to 35% (for ordinary incomes of up to $425,800) have a 15% tax rate on qualified dividends. The tax rate on qualified dividends is capped at 20%, which is for individuals in the 35% or 37% tax brackets and with ordinary income greater than $425,800. These tax rates on long-term capital gains are current through the 2019 calendar year. Note also that there is an additional 3.8% Net Investment Income Tax (NIIT) which is applicable for individuals with modified adjusted gross income exceeding $200,000 or $250,000 for married taxpayers who are filing their taxes jointly.

Answers are correct to the best of my ability but do not constitute legal or tax advice.
**If this post is helpful please click on "thumbs up"**
Hal_Al
Level 15

Does my dividend and long term capital gains income count towards my ordinary income? If no and my ordinary income $0, what will my dividend and capital gain tax %'s be?

Q. Does my dividend and long term capital gains income count towards my ordinary income?

A. Simple answer: No*. 

 

Q.  If my ordinary (other than capital gains) income is  $0, what will be the tax on my capital gains?

A.  Your first $39,475 ($78,950 Married filing jointly) of long term capital gains and qualified dividends will be taxed at 0% (no tax) anything more will be taxed at 15%.

 

*But taxes aren't simple.  Capital gains and qualified dividends are technically part of your gross income and adjusted gross income (AGI) and may affect your eligibility for other tax benefits; in particular in determining how much of  your social security benefits are taxed. 

Anonymous
Not applicable

Does my dividend and long term capital gains income count towards my ordinary income? If no and my ordinary income $0, what will my dividend and capital gain tax %'s be?

dividends can be either qualifying or non-qualifying.  only the qualifying ones are included with net Long term capital gains for the preferred rate. 

RonR1
New Member

Does my dividend and long term capital gains income count towards my ordinary income? If no and my ordinary income $0, what will my dividend and capital gain tax %'s be?

I have completed my TurboTax 1040. Filing Married - Joint. My tax bracket is 22%. My taxable income is less than $165K, so Long Term Capital Gain Tax should be calculated at 15%, correct? 

 

I am using the 1099-DIV provided by my broker. When I remove the Long-Term Capital Gain reported on the 1099-DIV, then add it back in, my tax liability increases by 30%, not 15%.

evang
New Member

Does my dividend and long term capital gains income count towards my ordinary income? If no and my ordinary income $0, what will my dividend and capital gain tax %'s be?

When I enter my long term capital gain on schedule D it shows up on the 1040 and contributes to AGI.  I thought the capital gains tax rate was 15%, but this looks like it is just contributing to the total AGI and will ultimately be taxed as income.  Can you explain how I can determine what the actual tax is, so that I can decide whether an installment sale would make more sense?

Critter-3
Level 15

Does my dividend and long term capital gains income count towards my ordinary income? If no and my ordinary income $0, what will my dividend and capital gain tax %'s be?

It is added to your other income and can affect other thing on your return  and does affect the tax rate for the LTCG ... switch to the FORMS mode and review the Cap Gains worksheet to see the calculations. 

Dynamic AdsDynamic Ads
Privacy Settings
v