Are dividends taxed differently than capital gains?

Are dividends taxed differently than capital gains?

Yes, dividends and capital gains are taxed differently. Dividends are typically taxed as ordinary income, while capital gains are taxed based on how long you've held the asset.

What are the tax rates for dividends and capital gains?

The tax rate for qualified dividends is usually 0%, 15%, or 20%, depending on your income level. Long-term capital gains are also taxed at these rates, while short-term capital gains are taxed as ordinary income.

Are there any exceptions to these tax rates?

Yes, there are exceptions. For example, certain dividends may be taxed at a higher rate if they don't meet the criteria for qualified dividends.

How can I minimize my tax liability on dividends and capital gains?

You can minimize tax liability by holding investments for the long term, utilizing tax-advantaged accounts, and considering tax-loss harvesting.