The tax rates for ordinary dividends (typically those that are paid out from most common or preferred stocks) are the same as standard federal income tax rates, or 10% to 37% for the tax years 2021 and 2022. Investors pay taxes on ordinary dividends at the same rates they pay on regular income, such as salary or wages.
Qualified dividends are taxed at the same rates as the capital gains tax rate; these rates are lower than ordinary income tax rates
Yeah, it confuses many people that Qual dividends are included in the Ordinary dividends value. WHY the IRS chose to report them that way is confounding.
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Try it another way...box 1a is all Apples, the sub-portion of 1a that can be further ID'd as MacIntoshes is in 1b.
The 1b number is treated differently (got to peel those annoyingly tough MacIntosh skins)
Wow!
that really clears things up.
So if line 1a is the same as 1b turbo tax taxes the dividend’s as income, is that correct?
That is what I found on the IRS web site. The problem is the dividends are the same on line 1a and line 1b. How should it be taxed?
Not sure exactly what you are saying...but if 1a and 1b are equal....then the entire amount is treated as Qualified dividends.
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Yes, the total amount is included in AGI, but the value specified by the 1b amount will be treated/taxed differently.