Question

Carson owns shares of a money market mutual fund. During the year, he received $2,800 in dividend distributions, $700 of which he received in cash. He elected to use the remaining $2,100 to purchase additional shares of the fund. The total amount of dividend income subject to tax is

Answer 1

The Amount is $0

Step-by-step explanation:

In accordance with Tax Law:

If a person receives dividends or other income from mutual funds that is greater than 5,000 in a calendar year, 10% TDS will be applied.

The dividend amount in this case, which is less than 5000, is 2800. So, there is no tax due. The only time Xavier's income is taxable is if he earned a dividend of more than $5,000 annually.