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Posted by Ernie Klein on April 11, 2008, 8:04 pm
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> > Can someone please explain to me what are Ordinary and Qualified Dividends?
> > [...]
>
>
> What I want to know is why the crazy worksheet on page 35 of the 1040
> instructions is so difficult to comprehend. Isn''t there an easier way
> to explain what it is doing? Thanks.
All of your income, including capital gain and qualified dividends are
included in your adjusted gross income (AGI). Your taxable income comes
from your AGI after adjusting for deductions and exemptions. However,
if your taxable income contains capital gains or qualified dividends,
then they may not be taxed at the same rate as the rest of your income.
The rate that they are taxed at depends on the amount of taxable income
and your filing status. The worksheets are designed to separate out the
capital gains and qualified dividends and apply the correct tax rate to
them. It is messy because it has to work for every circumstances
(different income levels, different filing status, etc).
--
-Ernie-
--
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