When it comes to dividend investing, it’s crucial to understand how dividend taxes vary from investment to investment – because your wealth protection strategy should change accordingly.
As Marc says in this week’s video, “Uncle Sam treats various types of dividends differently.”
For instance, qualified dividends – the kind paid by most companies – are not taxed at all for single filers earning $40,400 or less or for joint filers earning $80,800 or less.
The rates go up for those earning more, including an additional 3.8% tax on dividends for single filers with incomes of more than $200,000 or joint filers making more than $250,000.
But “ordinary,” or nonqualified, dividends are different – and so are some of our favorite income investing vehicles here at Wealthy Retirement: real estate investment trusts (REITs) and master limited partnerships (MLPs).
There also are important differences depending on whether you hold your dividend payers in taxable or tax-deferred accounts.
Marc always recommends talking with a tax professional who can speak to your specific situation.
But before you do, be sure to watch this week’s video so you’re armed with the information you need to save every penny you can.