I am filling out a W4P form.
I have read that qualified dividends are not taxable if your income is under 63k for head of household category.
How would 8k in qualified dividends be taxed if your income is over 63k?
Should the 8k be included when filling out W4P step 4a "other income" Will the IRS software take
Thanks for your help
Since dividends are usually not subject to withholding, it's a good idea to include the portion of dividends that are taxed on your Form W-4P under Other Income.
Qualified dividends are taxed at a preferential long-term capital gains rate. You can find the breakdown of the rates here. But generally, the rate depends on your filing status and your total taxable income. As an example, if you are filing using Head of Household status, then if your total taxable income is under $64,750 in 2025 ($63,000 in 2024), the qualified dividends will be subject to a 0% rate.
But let's say your taxable ordinary income is $62,000. In addition to that, you have $8,000 in qualified dividends. The portion of the dividends that brings you to the threshold will not be taxed ($64,750 minus $62,000 = $2,750). The rest of the dividends ($8,000 minus $2,750 = $5,250) will be taxed at 15%.