Elsie and Elmer received $400 in qualifying dividends from the Virginiana Mutual Fund.Elmer and Elsie filed a joint income tax return for 2011 reporting $40,000 of taxable income including the dividends.If their tax rate on ordinary income is 15 percent,what is the tax rate for the dividends?

Question

Quizplus · Accepted Answer

The tax rate for qualifying dividends is typically lower than the tax rate on ordinary income. In this case, since the dividends are qualifying dividends, they are taxed at a rate of zero percent for taxpayers in the 15 percent tax bracket. Therefore, Elmer and Elsie do not owe any tax on the $400 in qualifying dividends.

Elsie and Elmer Received $400 in Qualifying Dividends from the Virginiana