(For purposes of checking tax worksheet calculations for the US Federal return, Form 1040) Assuming you just have ordinary income and qualified dividends, your qualified dividends may be taxed at a more favorable rate compared to regular income, such as 15% instead of 24%.
The question I have is, if you have a capital loss, which tax rate of taxable income does it offset? Is it prioritized such that it offsets the lower taxed qualified dividends part, first, and capital losses erode the benefits of favorable tax rates on qualified dividends?
[If you also have a capital gain, it might also have been taxed at a more favorable 15%. But I assume this is mostly irrelevant if you have a capital loss.]
Example:
Suppose total income is something in the middle of the tax bracket, say $T so we don't cross brackets. Qualified dividends is $6,000, Capital Loss subject to limitations is $3,000.
Would total tax therefore be 'tax on $T, plus 15% of $3,000'? ($3,000 = $6,000-$3,000)
