Tim, a single taxpayer, receives $500 of qualified dividends from Exxon in the current year. His taxable income before the dividends is $26,000. Tim's tax on the dividends will be:

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Quizplus · Accepted Answer

Qualified dividends are taxed at the capital gains tax rate, which is 0% for individuals with taxable income in the lowest brackets. Since Tim's taxable income before dividends is $26,000, he falls within the 0% capital gains tax bracket for a single filer in the current tax year, meaning he owes $0 tax on the qualified dividends.

Tim, a Single Taxpayer, Receives $500 of Qualified Dividends from Exxon