$50,000 in Dividend Income, 0% in Tax. Here’s How.

I’m going to show you my favorite (perfectly legal) way to pay 0% tax on your dividend income. To show you the big savings this could mean, let’s look at two fictional investors who are nearing retirement: Jane and Janet. We’ll assume both are single, are earning $50,000 per year and live in a state with no income taxes. Now let’s assume Janet has taken the so-called “right” path, as suggested by her financial advisor, while Jane has steered her own course. A quick look at both will show how that “right” path can create a hefty tax problem. Let’s say Janet put a million dollars in the Vanguard S&P 500 ETF (VOO) because she’s been told that a low-cost index fund is best for retirement.… Read more