Dividend Tax Question

I have a question. I have stock in a company. They give me a tax form saying I received, lets say 100K but they only distrubt a check for 33K. So i have to pay taxes on 100K. They say they reinvest the other 77K back in the company. This is done to every stockholder. Is this legal? Should they give out what they say I received in my tax form? or should they keep the money in the business before they give me a tax form for higher? Thanks!

NorthBeachFL said:

or should they keep the money in the business before they give me a tax form for higher? Thanks!

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It doesn't look good. I don't see any logic for them to inflate your dividends and you have to pay taxes on the dividends that you "do not" receive. If they didn't declare that non-cash (to you) dividend it's still your bigger share of ownership in the corporation, why declare the dividend and you have to pay tax on it, and the corporation did not get in any better position financially.

The only reason that they do it so that they can go around and tell other people how much dividends they pay to each shareholders and hook them into buying the shares, that's my assumption. Other than that, no one would declare a huge "phantom" dividends so that shareholders have to pay tax on.

It's time for you or your lawyer to request a review of their books.

PS: If you're not a US resident, they might have to withhold about 20% of your dividend income for Federal Estimate Taxes on your earnings. And if you are US citizen but behind your tax filing in other years, the 20% Federal Income Tax withholding also applied, but no more than 20%, and the money is sent to the Fed, it's a form of your tax prepayment for the year and you claim it when you file your tax return - not the money that the corporation is keeping for you.