What is the tax on stock dividends?
Stock dividends are merely extra shares of the stock from the company stock that you already own. The amount of shares you receive depends on how many shares you already own.Dividend TaxStock dividends are not taxable as long as they follow the traditional method of receiving extra stocks so that you have more stocks for less money. However, there are exceptions that make the dividends taxable.Cash DividendIf you choose to have your stock dividend turned into cash, then you must pay tax on that amount of cash. The tax amount is up to 15 percent and depends on your current tax bracket.Preferred StockIf you receive preferred stock shares for your stock dividend when other shareholders receive common shares, you must pay up to 15 percent tax on the preferred shares of stock.Option StockIf you are given the option to take a cash or stock dividend, you will have to pay tax if you choose the stock option at a 15 percent or less rate that depends on your tax bracket for the year.ReportingDivi
