Samantha received an eligible dividend in the amount of $2,000.She is in a 50% tax bracket for regular income.How much is Samantha's dividend tax credit? (Assume a dividend tax credit rate of 15%.)

Question

Quizplus · Accepted Answer

Samantha's taxable dividend income is $1,000 (since eligible dividends are taxed at a lower rate than regular income). Her dividend tax credit is calculated as 15% of the taxable dividend income, which is:

$1,000 x 15% = $150

Therefore, the amount of tax Samantha will save on her dividend income is $150. However, since Samantha is in a 50% tax bracket for regular income, she will still need to pay taxes on her dividend income at a higher rate. The additional tax she will owe is:

$1,000 x 50% = $500

So, Samantha's total tax payable on her dividend income would be:

$500 - $150 (tax credit) = $350

Therefore, Samantha's dividend tax credit is $150, which is closest to option B ($414).

Samantha Received an Eligible Dividend in the Amount of $2,000