What are the potential tax implications for shareholders receiving the dividend, especially for foreign investors?

Answer

Below is a detailed overview of the tax consequences that shareholders—both U.S.‑based and foreign—are likely to face when they receive the $0.415 per‑share quarterly cash dividend that Ashland Inc. (NYSE: ASH) announced on 8 August 2025.

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1. What the dividend is for the shareholder

Item	Detail
Dividend amount	$0.415 per share (cash)
Payment date	15 September 2025
Record date	1 September 2025 (shareholders of record at close of business)
Frequency	Quarterly (the next three dividends will be the same amount unless the board changes the policy)

When you own the stock on the record date, you will receive the cash amount on the payment date. The cash is treated as ordinary dividend income for tax purposes.

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2. U.S. Shareholders (individuals, corporations, trusts, etc.)

2.1 Ordinary vs. Qualified dividends

• Qualified dividend – most cash dividends paid by a U.S. corporation are qualified if the shareholder meets the holding‑period requirements (generally > 60 days during the 121‑day period that begins 60 days before the ex‑dividend date).
  
• Non‑qualified dividend – if the holding‑period test is not met, the dividend is taxed as ordinary (non‑qualified) income.

Ashland’s dividend is likely to be a qualified dividend for most shareholders because it is a regular cash dividend from a U.S.‑listed corporation and there is no indication that the stock is a “preferred” or “restricted” share that would disqualify it.

2.2 Federal income‑tax rates (2025)

Taxable income (single)	Qualified dividend tax rate
$0 – $44,625	0 % (tax‑free)
$44,626 – $492,300	15 %
$492,301+	20 % (plus the 3.8 % Net Investment Income Tax on high‑income)

• Non‑qualified dividends are taxed at the shareholder’s ordinary marginal tax rate (10 %–37 % in 2025).
  
• The Net Investment Income Tax (NIIT) of 3.8 % applies to the lesser of net investment income or the amount of modified adjusted gross income (MAGI) that exceeds $200,000 for single filers ($250,000 for married filing jointly).

2.3 State and local taxes

• Most states treat dividend income the same way as federal (i.e., as ordinary income).
  
• Some states (e.g., California, New York) have separate rates for “qualified” vs. “non‑qualified” dividends, but the difference is usually modest.
  

2.4 Reporting

• Form 1099‑DIV will be issued by the broker/ASH’s transfer agent (usually in February of the following year) showing the total dividend amount and the portion that is qualified.
  
• The shareholder reports the dividend on Form 1040, line 3b (qualified) and line 3a (total ordinary dividends).
  

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3. Foreign Investors (non‑U.S. persons)

3.1 U.S. withholding tax on dividends

• By default, the United States imposes a 30 % statutory withholding tax on cash dividends paid to non‑resident alien individuals and foreign corporations.
  
• The withholding is on a gross‑basis (i.e., before any foreign‑tax‑credit or deduction).
  

3.2 Treaty‑reduced rates

• Many countries have income‑tax treaties with the United States that lower the dividend withholding rate to 10 %, 15 %, or even 0 % (e.g., certain EU countries, Canada, Japan).
  
• The exact treaty rate depends on the resident country of the shareholder and the type of shareholder (individual vs. corporation).
  

Action: The foreign investor must submit a IRS Form W‑8BEN (or W‑8BEN‑E for entities) to the broker/ASH’s paying agent, certifying foreign residency and, if applicable, the treaty rate. The form must be kept up‑to‑date (generally valid for three calendar years).

3.3 Practical withholding calculation

Example	Resident country	Treaty rate*	Net dividend after withholding
1,000 shares × $0.415 = $415	United Kingdom	0 % (UK‑US treaty)	$415 (no withholding)
1,000 shares × $0.415 = $415	Brazil (no treaty)	30 %	$415 × 70 % = $290.50
1,000 shares × $0.415 = $415	Canada	15 %	$415 × 85 % = $352.75

*Treaty rates are subject to change; investors should verify the current treaty tables on the IRS website or with a tax adviser.

3.4 Credit for foreign tax paid

• Foreign‑tax‑credit (FTC): If the foreign investor’s home country taxes the dividend, the investor may be able to claim a credit for the U.S. tax withheld (or the full dividend if no U.S. tax was withheld).
  
• The credit is generally limited to the amount of foreign tax actually paid, not the amount withheld (i.e., the FTC can offset the home‑country tax, not the U.S. tax).
  
• Some jurisdictions treat the U.S. withholding as a final tax and do not allow a credit; the investor must accept the net after‑withholding amount.

3.5 Reporting in the home country

• The dividend will appear on the investor’s U.S. Form 1099‑DIV (or an equivalent statement) and on the foreign tax return as foreign‑source dividend income.
  
• The investor must disclose the U.S. withholding (or the treaty‑reduced amount) on the foreign return, often as a foreign‑tax‑paid line item.
  

3.6 Potential pitfalls for foreign investors

Issue	Why it matters	How to avoid it
Incorrect W‑8BEN	If the form is missing or contains errors, the payer will default to the 30 % rate.	Submit a correctly completed, signed W‑8BEN before the dividend is paid; keep a copy for records.
Treaty eligibility	Some treaties only apply to individuals (not corporations) or require a beneficial‑owner status.	Verify the treaty’s scope; if you own shares through a foreign holding company, you may need a different form (W‑8BEN‑E).
State‑level taxes	Some U.S. states impose a state‑level withholding on foreign dividends (e.g., California).	Check the specific state’s rules where the dividend is sourced; most states do not levy separate withholding on foreign investors.
Double‑taxation	Home‑country may tax the dividend without granting a credit for U.S. tax.	Review the home‑country’s foreign‑income‑tax‑credit provisions; consider filing a claim for a credit for the U.S. tax withheld.

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4. Bottom‑line checklist for any shareholder receiving the Ashland dividend

For U.S. shareholders	For foreign shareholders
1. Verify you held the shares > 60 days in the 121‑day window to qualify for the lower qualified‑dividend rate.	1. Determine if your country has a U.S. tax treaty and the applicable dividend‑withholding rate.
2. Keep track of the total dividend (Form 1099‑DIV) and the “qualified” portion.	2. Submit a valid Form W‑8BEN (or W‑8BEN‑E) to the broker/ASH’s paying agent before the record date.
3. Report the dividend on Form 1040 (line 3a/3b) and include any NIIT if your MAGI exceeds the threshold.	3. Record the U.S. withholding on your foreign tax return; claim a foreign‑tax‑credit if allowed.
4. Account for any state/local tax on the dividend.	4. Keep the W‑8BEN on file for at least three years; renew before expiration.
5. If you are a high‑income investor, be aware of the 3.8 % NIIT on net investment income.	5. Check whether your home‑country treats the dividend as foreign‑source (eligible for credit) or domestic (may be taxed twice).

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TL;DR (for quick reference)

• U.S. investors: The $0.415 dividend is likely a qualified dividend and is taxed at 0 %, 15 % or 20 % (plus the 3.8 % NIIT) depending on your taxable income. It is also subject to ordinary federal and state income tax if you don’t meet the qualified‑dividend holding period.
  
• Foreign investors: By default a 30 % U.S. withholding applies, but most countries with a U.S. tax treaty can reduce the rate (often to 10 %–15 % or 0 %). To obtain the reduced rate, you must submit a valid IRS Form W‑8BEN (or W‑8BEN‑E). The withheld tax may be creditable in your home country, but you need to report it correctly on your local tax return.
  

Recommendation: Because dividend taxation can be nuanced—especially when treaties, holding periods, and high‑income NIIT considerations are involved—both U.S. and foreign shareholders should consult a qualified tax professional (or CPA) to confirm the exact tax treatment for their specific situation.