No. of Recommendations: 0
If you have 100 shares of Coke and it generates $10 in dividends, you are pay $2 in taxes. (Numbers obviously made up). Whether you spent $2, $5, of $10 of that dividend. The only way to make the dividend tax lower, sell 50 shares, you now have $5 in dividends and a $1 tax due.

My point is that whether you spend the $10 or not it is still taxable income and you still pay $2 in taxes on it.

So if you sell other assets to generate income to cover living expenses your tax bill is the tax from that sale plus the $2. Hence, spending the $10 dividend reduces the need for other taxable income.
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.