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Are stock dividends taxable?

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asked Sep 13, 2015 in Finance by nilupa1973 (35,290 points)
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Stock dividends are taxable in certain circumstances. These include whether the dividends are inside a retirement account or not, whether the dividend is stock or cash, and what state you live in.


Typically, stock dividends held within retirement brokerage accounts are not taxed, as they are inside of a tax shelter. Dividends that are outside of a retirement account are often subject to normal income rules, regulations and taxes that other forms of investments fall under.  


Dividends are often rewarded as either pure cash or as additional stock shares. Cash dividends are typically subject to a 15-percent federal tax. Stock dividends aren't usually taxed until the collective of shares owned is sold.


While IRS rules and federal tax laws cover all American citizens equally regarding dividends, not all Americans pay the same overall amount of taxes on dividends. Some states have additional income taxes that must be paid on top of the federal ones, while a few states do not. Among the income-tax states, rates and rules vary state by state.


[1]http://www.investopedia.com/ask/answers/101314/are-stock-dividends-and-stock-splits-taxed.asp
[2]http://www.hrblock.com/free-tax-tips-calculators/tax-help-articles/Investments/Stock-Dividends.html?action=ga&aid=27032&out=vm

answered Sep 14, 2015 by Topher (27,830 points)

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