Asked by nikki scalera on Apr 28, 2024
Verified
When an individual's marginal ordinary income tax rate is less than 25%,the tax rate on qualified dividends is:
A) 5%.
B) 15%.
C) 0%.
D) 10%.
Qualified Dividends
Specific types of dividend payments to shareholders from corporations that meet certain criteria set by the IRS, often taxed at a lower rate.
Marginal Ordinary Income Tax Rate
The rate at which the next dollar of taxable income is subjected to tax, applying to ordinary income such as wages and salaries.
Tax Rate
The percentage at which income or financial transactions are taxed by the government.
- Understand the tax implications of qualified dividends based on marginal tax rates.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
C
Explanation :
When an individual's marginal ordinary income tax rate is less than 25%, the tax rate on qualified dividends is 0%. This is because qualified dividends are taxed at a lower rate than ordinary income for individuals in the 10% or 15% tax brackets, and at 0% for those in the 0% to 15% tax brackets.
Learning Objectives
- Understand the tax implications of qualified dividends based on marginal tax rates.