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10. true/false dividends are paid by companies based on their profits and reserves. although they are subject to income tax, a taxpayer

Question

10. TRUE/FALSE Dividends are paid by companies based on their profits and reserves. Although they are subject to income tax, a taxpayer can minimize the tax paid on dividends if the taxpayer's income is less than the Standard Deduction. True False

Answer

4.2 (226 Votes)
Verificación de expertos
Peter Expert · Tutor for 3 years

Answer

### True

Explanation

## Step1: Understanding Dividends and Taxation### Dividends are payments made by a corporation to its shareholders, usually derived from profits and reserves. These payments are generally subject to income tax.## Step2: Standard Deduction and Tax Minimization### The standard deduction is a portion of income that is not subject to tax, which reduces the taxable income. If a taxpayer's total income, including dividends, is less than the standard deduction, the taxpayer may not owe any income tax on those dividends.## Step3: Evaluating the Statement### Given the information, if a taxpayer's income, including dividends, is less than the standard deduction, they can indeed minimize or eliminate the tax paid on dividends.