How to pay ZERO taxes on JEPI or SCHD dividends 

The number one question I got from my last video on JEPI was around taxes. Let's talk about it. Try M1 Finance: bit.ly/TryM1Finance How to transfer to M1: bit.ly/TransfertoM1 Seeking Alpha Premium (get 58% off): bit.ly/SeekingAlpha-DGI Instagram: instagram.com/dgi_jake/ Dividend Reinvestment Calculator: docs.google.com/spreadsheets/d/1W8UvXLZdEpVX-UPTKiHIT1oYIkj7Omvf30FgB3FTKWY/edit?usp=sharing

I love those "Pay No Tax" breakdowns you do. I saw a video you did a long time ago about it. And that has been my guiding plan as we advance. I know things can change, but it is a perfect fit for me as the clock ticks away. Thanks for all you do!👍

I think lot of us had these questions in mind, thank you so much, btw I eagerly wait for your video all week

Nicely done video with useful links to planning tools - very good information for those looking to understand how your tax can be calculated and how you can simulate various allocation strategies between qualified and non-qualified dividends

Another awesome video! I invested in Jepi this year and so helpful to know what’s expected for tax in a few months . Thank you !

I've been waiting, happy to listen! Love tax conversations. Hopefully the algorithm rewards them.

This is such a great video! Thank you so much for this information and I will definitely check out your other videos

As a a CPA I tax plan throughout the year but it starts getting real starting in October. We both work so our portfolio does figure into our tax bill. One day we will have to figure in Social Security in that tax bill and your viewers should keep in mind. This was good info to give your viewers what’s involved in figuring taxes. It can get quite involved. Not sure if you will have a video next week, so Merry Christmas and Happy New Year Jake, to you and your family. We are all blessed!

What a great video. We're not newly-retired, but we are new to dividend stocks. We've lived in Latin America over 14 years, so our expenses are very low already, & we live great. By watching your video, I see will have to pay zero taxes on dividend income. This is a Marvel to me, so thank you very much.

Excellent video Jake. This helps a lot with my dividend income for taxes.. Eye opening!

this is by far the best video I've seen for qualified dividends and how to make them work for you.

Excellent detail and right on time for me. Thank you!

A tutorial from Jake on how to not pay taxes? Im in.

Thank you for the education. Your short clips after recordings are pure joy😂

Bro thank you for this information, I needed to hear this. I live in a rural area where the cost of living is low, so I need around $40,000 a year in dividends in order to retire early. The cost of living here is around $30,000 to live comfortably, so I want the $10,000 to set aside and still be able to dollar cost average in to continue growing my dividend income. You really helped me and this is very appreciated.

Appreciate your efforts in making the 30min video. Wondering how many hours was your original content. Just for your subscribers like me who wants the summary of this video. 1. Understand Qualified vs non qualified dividends and what your holding pays 2. Understand their taxation 3. Simulate your taxes on couple of tax calculators

Excellent video! Thank you for posting.

Thank you for another excellent video sensei!

Love the video inserts and fail army videos! 😅

This is next level FIRE /tax planning! Strategic yet simple.

Thank you! These are actually the only two investments in my IRA.

dude!!! this was a bomb video! more

Thank you sir! Brilliant! Cheers mates!!

This was such a helpful and informative video. And also made me want to increase my SCHD exposure lol

great video! thanks for sharing

Amazing video thank you

Love this topic, what I usually recommend to people is to keep that dividend income under 89k for filing married, and move to 0% income tax state and you officially pay 0%. You are in TX so you are set my dude, Im going for either WY, or TN.

Best video ever.

Thank you so much!

Taxes must be estimated with a real world example that usually includes social security income. To do this, you have to complete the SS tax worksheet first with an estimate of both SS income and dividend income, then from there complete the Qualified dividends and Capital gains worksheet. This will give you a ballpark total tax burden.

Great information not discussed enough in FI youtube

So buy JEPI in a tax advantaged account is what this tells me.

Averaging into JEPI in my Roth. Get that 14% annual drip tax free!

I keep my REITS and other capital growth stocks in my Roth IRA /PCRA.I only have MLP's in my regular brokerage account.Not much for ETF's but to each there own.Happy investing/stacking.

My taxes are pretty wild because some of it is qualified, ordinary, short term gains, long term gains, and some might be ROC. Always glad for technology when I can just upload the file from brokerage and it fills in for me

📣 No more taxes! No more taxes! 😁👍🏼 Happy Sunday Jake! 🎄

Thanks for grabbing that tax rate chart to all the different countries. I was going to grab some TD but why take on that extra tax burden. I appreciate the information.

How do you tell how stocks are taxed... Which ones are qualified, etc?

Watching this now is hilarious when you get to the inflation part lol

Good video. What you think about the fear mongering on schwab bank becoming insolvent and their stock tanking ? How does that effect SCHD dividend stock even tho stocks are covered under different umbrella with SPIC in comparison to banks being covered under FDIC. From my understanding dividends stocks if you are single and make under $41k earned income then you don’t get tax on those capital gains. That’s from my understanding but I could be wrong.

Hey! That World Cup final was the greatest game of all time! But I definitely nerd out while others are out at brunch, etc.

If you have a side hustle, the best way to avoid tax when doing the side hustle is to contribute $7500 of that W-2 earnings into a Traditional IRA and check if you can maybe get a retirement savers credit to additionally save some tax on $4000 of the money contributed.

what category would pensions fall under for income on the calculator you use in the video? Thanks

Hay Jake great video. I hope you and your family have a great Christmas. If you haven't read "The Behavioral Investors" I would give it a try. I found it to be a good read

Looking at JEPI for a seperate IRA that i started and was wondering if DRIP with JEPI would be worth it. No taxes until i start withdrawing... Not sure if I should go more growth or a high yield dividend DRIP

So, you do not pay any capital gains tax if your income from dividends are under $89,000 if married? Is that how it works? Or is that only if you sell the stock, and the profit from the sale is under the 89k? Thanks!

My guess before watching the video is that you hold it in an Ira during your working years and then do a Roth conversion ladder up to the standard deduction each year post retirement.

Everyone wants to pay less in taxes! More money for us to spend on stuff that brings us joy.

Very interesting video, but you really left out the most important consideration - the effect of tax drag ** during accumulation **. The distribution from JEPI substantially increases your tax burden during accumulation. And for a fund that already underperforms SCHD and SPY, losing 22-32% of the distribution to taxes every year would be devastating to accumulating wealth. The extremely high distribution is basically 75-100% of the expected total return of the fund, so 85% of any returns, every year, whether the fund is up or down, will be taxed at ordinary income rates! It's a tax disaster. For medium to high income earners it's an absolute non starter. For a MFJ household with each spouse making $75K ($150K total), their total tax burden with no ordinary income from JEPI would be roughly $16,500. With $50K of JEPI distributions added to that during a typical accumulation year, the tax burden jumps to $27,500, effectively eliminating $11K of the $50K of JEPI income! 22% in this case, more for higher earners! In a year the S&P returns 10%, even if JEPI matched it, the net return would only be 7.45% due to tax drag and management fees. That's even worse than paying a "fund manager" a 2% annual fee to manage a one-fund portfolio of 100% SPY! 🤦🏻‍♂ It's important investors realize this because FIRE happens at the end of a multi-decade accumulation process. Tax impact doesn't begin at FIRE. There are a lot of factors to consider and your amount of household income during accumulation matters substantially. Tax-wise, it is likely going to be smart to coast-FIRE your taxable account to minimize the tax drag and start paying down your primary mortgage early instead, depending on your mortgage interest rate. FIRE with $60K of SCHD dividends, a $15K self-employed part-time job that is mostly negated with tax deductions and no mortgage payment due to having a paid off house is MUCH more tax efficient. Your "portfolio" is also better positioned for long term growth, more safeguarded against high inflation, and less susceptible to tax code changes. Not having a mortgage gives your retirement plan the resiliency of having very low fixed expenses relative to total expenses. Housing expenses are the highest expense category for retirees. Things to think about! Personally, I'd get off the JEPI train entirely. There's just no supportable investment thesis for that fund vs. a simpler, better performing and more tax efficient fund like SCHD or VOO.

I currently hold my Roth with Vanguard and my intention was to exclusively have vanguard etfs in my Roth. Vanguard has excellent customer support, but I am wondering if it would be wise to switch platforms to M1 so I can take advantage of other brands and other etfs that aren't with vanguard. One drawback I see with doing is the lack of potential customer support that vanguard really excels at

Where is the link to your second tax calculator (more complicated one)? I seem only able to find the 2021 version when I googled.

Hi there, I think you may have left something important out when you were running the scenarios on income from qualified VS REITS. I am pretty sure you get a 20% deduction on REIT distributions? I am not an expert by far but I am pretty sure there is a 20% deduction available on income derived from REITS. Would love to hear your comments. Thx for putting up this video. I too plan to retire on dividends and rental properties in 8 to 10 years!!

Hi I’m 14 and I’m starting dividend investing and I’m planning on investing in both jepi and schd but I’m wondering if you think that there are any other specific dividend growth stocks that I should invest in, I watched your time horizon video but am still wondering your thoughts. Love the content keep it up

Please read Investopedia topic "Understanding taxation of foreign investments" It describes how you are NOT taxed by the US on overseas investments that you have paid tax to the foreign govt. If the foreign tax is more than the US tax then nothing is owed to the IRS, if the foreign tax is less than the US tax, then you pay the difference to the IRS. It is called the "Foreign Tax Credit"

I really like JEPI but it seems like there is no way to escape the 30% withholding taxes for non-US residents. Anyway, thanks for the great content 👍.

Great video. Question. I’m 43 and started my investment journey a bit late. I currently have SCHD & FSKAX in My Fidelity Roth IRA. Planning on adding JEPI after watching this video. I also have a taxable brokerage account but not sure where to put my focus for growth & dividends at this stage of my life. I have been focusing on VOO & a few single stocks like QYLD etc. any advice as to where I should really be putting the majority of my $ in my taxable account whenever I get paid? I appreciate it

So does it matter when you buy schd in a brokerage account? When would be the best time if it does matter?

Let me know when you find a way to not pay the tax for a foreign investor

We have 5000 jepi shares. And pay tax on the dividend income at 22%. Jepi yield at 12% means our net is close to 10%. We are just fine with at that tax impact.

As a german i have tears in my eyes watching this video 😵 Our tax free rate is 1000€/$ per person per year. 1K! 🤢

Wow this is awesome going to invest in more non qualified dividends when I get closer to fire if things stay the same

I file single and am trying to choose weather i should first pursue qualified dividends or jepi/reits.

The difference having an extra kid makes is crazy. I already have 3 and the 80k ordinary/20k qualified divis still comes out positive. That's nuts.

How does the taxes withholding work for etfs that focus on non us companies, like SCHY?

Can you use the HSA to offset taxes owed in terms of that REIT example?

Are you sure that non-qualified dividends are not taxed in an IRA? Thank you.

Hi, how do you figure out whether a stock provides qualified or ordinary dividend?

I have JEPI, DIVO & a REIT $O Realty Income for the dividend income portion of my IRA. I love $O for the diversification & great Income it will provide. But now I'm wondering if I should have the REIT? This gets complicated to me. I know what I need for income will be way under $89k. $2000/month from Social security...so I'd only need 48K/year of income. So is this a non issue for me? Any advice I'd appreciate.

This example leaves out that there he SCHD yield is incredibly low compared to JEPI. So even though SCHD is taxed more favorably, it lacks a lot in yield.

What about buying JEPI in a Roth IRA?

Is there any place to search 1099 div forms to decide on an investment?

is there any fund that pays nearly as well as Jepi but has a qualified (or largely qualified) dividend? I'm fairly new to this and this video was very helpful!

What about the standard deduction 25k. I thought that would help as well.

I'm counting down the days until I can contribute to my Roth IRA again! This year, my contributions will be 25% VTI, 15% VXUS, 15% VNQ, 20% DGRO, 15% SCHD, and 10% SPYG

How does international taxes work in terms of International ETF Stocks like VXUS?

If you're still doing youtube in a couple years, you have to get Lucas to do the outro for the channel! 😂

In my TD Ameritrade accounts, SCHD dividend is listed as Ordinary Dividend. Does that mean it's not qualified?

Jake, i just came across the fact that you can also withdraw money from a roth before 59.5 as long as you don't touch any gains. Can you make a video about how that could help provide additional income for us FIRE people?

Fact check: google foreign tax credit. Google 199a deduction for reit

I start buying jepi because I see you last video

I own 6000 shares of jepi, all my dividends go into a settlement fund with Vanguard, which is over 3k monthly. If I take anything out I pay 25% in taxes.

Do you have mutual fund for dividends that you invest in? Asking cause fidelity only lets me automate investing in mutual funds.

Are you allowed to collect dividends from positions in a Roth and never sell and never be taxed on those dividends?

I learned something amazing how I can work minimum wage and still earn extra income through dividends. I'm giving this creator a subscribe hoping he continues making more educated videos on investment strategies and planning in stocks, ETF, mutual, and bonds. To any anyone who's in 20 to 30 years old you can still live with your parents just on the first 1 to 3 or 6 year or better yet longer until mommy and daddy dies to save up and don't spend too much money on anything bullshit and focus on financial future. I can definitely see myself putting a total $10,000 dividends in both Qualified and Non-qualified dividends while earning 10% plus continuing working on a minimum wage jobs. Down the line lets say economy is still doing better, you lose your job, and rendered homeless you may probably still get $200 to $500 or $1,000 in monthly payments. Would anyone be happy receiving $1k a month on doing literally nothing?

All of my investments are in mutual funds in my Fidelity account. When looking at these funds, I couldn’t tell whether the dividends were qualified or non-qualified. Where is this specified? I couldn’t even figure out how to search Fidelity for funds that had qualified distributions. Is it as simple as making sure that there are no foreign companies and no bonds?

Is all of your retirement in Roth IRAs in does that matter when you are claiming the dividends on your taxes thank you

Damn. Step one looks like I need to get married. So far....not working out lol.

While I do have a Roth IRA with SCHD in it, I do have a nice sized taxable brokerage with about $49,000 invested into it. I can’t help but want to contribute to the taxable to help the compounding affect. I know that it is better to max out my Roth then add to my taxable account. I also have a 401k that I max out the matching %

Can comment on why you have a preference for JEPQ rather than JEPI? also, maybe speak to the various JEPx asset classes available

Basic question, if you had these qualified dividends in normal account and were making decent money from a job, you wont be paying any zero taxes on these dividends, correct? When i am retired and have no other income and below the threshold you show, only then you pay no taxes.

Will you be doing your own taxes or using a professional ?

Great tips and breakdown. My only critique as someone who listens in their car or on the move without actually watching the video. What is “this”? Sometimes without context clues I’m not sure what you are referring to with the word this. (This comment was written from home not in the car)

I guess no one is getting social security payments in retirement

And this is why I don't do my own taxes.

Should I pay tax on devidents if I reinvest it?

As a Canadian there's zero tax on US dividend in an RRSP account. But there's a 15% US withholding tax in any other account.

im new to investing. if I DRIP my dividends, do I get taxed on them? I don't plan on taking any of the money out for another 30 years.

Thanks for your videos, I just signed up for seeking alpha premium using your link below.

Does this only apply to taxable brokerage accounts? As I understand it dividends and gains are not taxed inside a ROTH

JEPI is best left in 401k or IRAs.