question.jpgIn Federal Income Tax

I reinvest my dividends to buy more stock. Do I have to pay taxes on these dividends?

Yes. If you are in a dividend reinvestment plan, or reinvest your dividends to buy back stock in the same company, you should still report the dividends as income. However, if you own stock in a company and you receive additional shares in lieu of a dividend, the dividend is usually not taxable; however, if you have the right to elect either stock or cash, the class of stock given in lieu of dividends is different than common stock, or the dividend is of convertible preferred stock, then the dividend is taxable.