Final answer:
Individuals report interest and dividend income annually on their tax forms by mid-April in the U.S., with the form used often being the 1040 or 1040EZ. The taxes on this income are determined by a progressive tax schedule.
Step-by-step explanation:
Individuals typically report their interest and dividend income on an annual basis when they file their income tax forms. In the United States, this occurs every year around mid-April.
The tax form used to report interest and dividend income is often the Form 1040 or 1040EZ for simpler tax situations. The tax schedule, which varies based on income levels, will determine how much tax is due on this income.
The system in place is progressive, meaning as income increases, the individual pays not only more in tax but also a larger fraction of additional income in tax.
Furthermore, individuals who invest in stocks and receive dividends have experienced changes in the average percentage of returns from dividends over the decades, with recent decades often providing lower returns from dividends compared to the past.