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

The dividend tax credit is calculated on the grossed-up amount of the dividend. The gross-up rate for eligible dividends is typically 38%, so the grossed-up dividend is $2,000 * 1.38 = $2,760. The dividend tax credit is then 15% of the grossed-up amount: $2,760 * 0.15 = $414.

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