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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.
2 Replies

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?

If you have capital gains or qualified dividends the tax is not taken from the tax table but is calculated separately from schedule D.  The tax will be calculated on the Qualified Dividends and Capital Gain Tax Worksheet.  It does not get filed with your return.

 

In the online version you need to save your return as a pdf file and include all worksheets to see it.

 

For the Desktop version you can switch to Forms Mode and open the worksheet to see it.  Click Forms in the upper right (upper left for Mac) and look through the list and open the Qualified Dividends and Capital Gain Tax Worksheet.

 

You can probably tell because the tax on 1040 will be less than the Tax Table

https://ttlc.intuit.com/community/forms/help/form-1040-line-11-amount-is-less-than-standard-irs-tax-...

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?

@VolvoGirl  Thank you!  Although I don't have a schedule D or can't figure out how to view any other worksheets that aren't on the downloadable pdf, when I did the calculation of the tax expected from line 15, it was indeed less than the number indicates.  I did some quick math to see the cap gains rate vs income rate, and it was almost exact.  It was a couple of dollars off, but I assume it's another worksheet or topic that's affecting it.  Close enough though and thanks again for that great response!!  I really appreciate it.

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