You are technically correct assuming your dividends aren't of the qualified variety. In that instance you don't pay capital gains, you instead pay full-fat inco

You are technically correct assuming your dividends aren't of the qualified variety. In that instance you don't pay capital gains, you instead pay full-fat income taxes! Capital gains are, however, absolutely owed on qualified dividends. In either case (with the added assumption that we're talking about securities held in a non-tax-advantaged account), your brokerage will send you an IRS form 1099-div. https://www.investopedia.com/ask/answers/011215/if-i-reinvest-my-dividends-are-they-still-taxable.asp https://www.investopedia.com/ask/answers/011215/if-i-reinves...