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Get Rich with Dividends

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Taxes

It's nearly impossible to predict what changes to tax laws might be forthcoming. But if you hear rumours of a rate hike on dividend taxes, look for stocks with strong insider ownership as you might be able to receive a special dividend before the rate increase. 

 

According to Professors Michelle Hanlon at Massachusetts Institute of Technology and Jeffrey L. Hoopes at the Ohio State University, before expected tax increases, companies, especially those with large insider ownership, often pay special dividends before the higher tax rate goes into effect because eventually the owners will be benefited the most in any such scenarios. 

 

Dividends held in an IRA or 401k are not taxed. You can consider holding dividend stocks in your tax deferred IRA or 401k. 

 

There may be foreign taxes on foreign stocks. Consult your tax adviser for advice.

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