Serbinski Accounting Firms

Eureka! You’re a savior. Thank you!!!

In my actual situation, I have qualified dividends. Can I just use the tax on the Qualified Dividends and Capital Gain worksheet to apportion the tax to the qualified dividends?

Keeping with the same example (except let’s change the deduction to a general one not specific to any source of income). Let’s say the qualified div’s are taxed at 15% (which is $750 of tax). That leaves $14,250 of tax to “attachâ€￾ to the remaining $55K of total income ($45K net income).

If I have a general deduction not specific to any source of income, this deduction is not apportioned to the qualified dividends, just everything else right?

In other words, the tax on the qualified dividends is determined first as if it was on a “separate islandâ€￾ ignoring all deductions. Then whatever tax is left over after accounting for the tax on the dividends is apportioned to all the remaining sources of income (minus the general deduction)

Does this sound about right?

It's normally not, but this year and one time before it was not. This year I had an early redemption penalty from 1099-INT. I can't remember what it was for in the other previous year.

So would it be as I described and I should use total income in this case instead of Adjusted Gross Income? All ...

I have a very similar situation to John except my rental income is very close to the same because I depreciate in Canada. I’m concerned about where you said AGI is used and not total income. Now I’m afraid I’ve been doing mine wrong the last couple of years. Let’s stick with his numbers ...