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Many are qualified dividends so they are taxed as long term capital gains if you’ve held the stock for at least 60 days. If you are wealthy and don’t draw an or

Many are qualified dividends so they are taxed as long term capital gains if you’ve held the stock for at least 60 days. If you are wealthy and don’t draw an ordinaryincome then this also means your tax rate is 0% on your qualified dividends.

gnicholas 8y ago
> * If you are wealthy and don’t draw an ordinary income then this also means your tax rate is 0% on your qualified dividends.* Really? I thought qualified dividends were taxed at the same rate as long term capital gains. This is zero for very low-income taxpayers, but certainly not "wealthy" ones, like you describe. Or perhaps I'm missing something?
- toast0 8y ago
  There's a difference between high income and wealthy. If you're wealthy, and you retire, you may not have a current ordinary income, so that any LCTG is all within the 0% rate; if your total taxable income is less than $38,600 for single filers, or $77,200 for joint filers; in connection with the standard deduction of $12k or $24k. If you make assume no other income, that's just about $50k or $100k of untaxed LTCG, in addition to whatever returned capital you need to spend. The trick is somehow the popular media has changed the word wealthy to mean high income instead of, you know, having wealth.
  - gnicholas 8y ago
    I'm aware of the distinction between wealthy and high-income (was a tax lawyer in a former life). I was objecting to the if-then in the prior post that said: if you're wealthy and don't have OI, then your dividend rate is 0. This is not true. It is only true for the first chunk of income, as you note. Also, this is equally true for LTCG, so in the context of this discussion (qualified dividends versus buybacks, which increase LTCG), it doesn't move the needle one way or the other.
sokoloff 8y ago
Only on the first ~$77K worth, which is probably less than the annual dividend plus capital gains income for a wealthy person.

gnicholas 8y ago

> * If you are wealthy and don’t draw an ordinary income then this also means your tax rate is 0% on your qualified dividends.* Really? I thought qualified dividends were taxed at the same rate as long term capital gains. This is zero for very low-income taxpayers, but certainly not "wealthy" ones, like you describe. Or perhaps I'm missing something?

toast0 8y ago
There's a difference between high income and wealthy. If you're wealthy, and you retire, you may not have a current ordinary income, so that any LCTG is all within the 0% rate; if your total taxable income is less than $38,600 for single filers, or $77,200 for joint filers; in connection with the standard deduction of $12k or $24k. If you make assume no other income, that's just about $50k or $100k of untaxed LTCG, in addition to whatever returned capital you need to spend. The trick is somehow the popular media has changed the word wealthy to mean high income instead of, you know, having wealth.
- gnicholas 8y ago
  I'm aware of the distinction between wealthy and high-income (was a tax lawyer in a former life). I was objecting to the if-then in the prior post that said: if you're wealthy and don't have OI, then your dividend rate is 0. This is not true. It is only true for the first chunk of income, as you note. Also, this is equally true for LTCG, so in the context of this discussion (qualified dividends versus buybacks, which increase LTCG), it doesn't move the needle one way or the other.

sokoloff 8y ago

Only on the first ~$77K worth, which is probably less than the annual dividend plus capital gains income for a wealthy person.