Beware of Taxes on Dividends

— -- The good news about dividends is your taxes have been cut. The bad news is somebody has to do the math.

A big part of last year's tax cut was slashing the rate on corporate dividends from as high as 40 percent down to 15 percent, or just 5 percent for taxpayers in the lowest bracket. But beware! It won't be easy to figure out.

"Dividend income from stocks and mutual funds is still reported on your form 1040 and, if it totals more than $1,500, it also goes on Schedule B. At that point, dividends qualifying for the special low rate are split off," said Kevin McCormally of Kiplinger's Personal Finance magazine.

"If you need a Schedule D, and you probably do if you have capital gains to report, then your qualifying dividends go there and a 35-line calculation, for figuring the tax-year dividends on all your income, as well," he added.

If you don't need a Schedule D, your dividends then go to a 29-line worksheet in the instruction book. All this might cause you to go to the store to buy tax software or go to a tax professional. Just because taxes have been cut doesn't mean they're any easier to figure out.

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