Did you know companies sometimes share their profits with people who own a piece of the company? These are called dividends! It's like getting a little reward for investing. But guess what? You have to pay taxes on those dividends.
This news explains how dividends and taxes work. It's important to understand so you don't get surprised at tax time!
- Dividends are shares of a company's profits given to shareholders.
- There are two types: qualified and non-qualified dividends.
- Qualified dividends have lower taxes than non-qualified dividends.
- You need to report dividends on your taxes if you earned $10 or more.
| Dividend Type | Tax Rate |
|---|---|
| Qualified | 0%, 15%, or 20% (depends on your income) |
| Non-qualified | Your regular income tax rate |
