Qualified Dividends


Today TaxMama® hears from Rogers in the TaxQuips Forum, with this question. “My 1099 DIV form shows that I received $2,345.60 in dividends from a typical domestic stock index fund. But what is unclear is, should the dividend be taxed at capitals gains rates, if it’s a qualified dividend? Or should it be taxed at regular income tax rate if they are just ordinary dividends? The $2,345.60 is in both column 1a and 1b. Which one is it – qualified or ordinary?”

        

Hi Rogers, 

When the 1099-DIV shows an amount in box 1b, (qualified dividends) that’s good news. That means the amount in that box is taxed under capital gains rules. (Please follow the links in the reply to get more details about dividends and how they are taxed.)

In your case, this means ALL your dividends are taxed as capital gains.  Well done!

And yes, if there were a lower amount, or no amount in box 1b, then some, or all, of your dividends would be taxed as ordinary income – at your highest progressive tax rate.

Note: I could complicate the issue by warning you about the effect of using an investment interest deduction. But, I won’t. You can read about that complication here.

And remember, you can find answers to all kinds of questions about dividends and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

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2 thoughts on “Qualified Dividends

  1. TaxMama says:

    Hi Shady,

    The IRS has some information here for you
    http://www.irs.gov/uac/Seven-Facts-about-Injured-Spouse-Relief
    Unfortunately, the IRS doesn’t include a sample of a filled-in form.

    CCH has this information on Injured Spouse Relief
    http://www.cchtestingcenter.com/static/course_pdf/CCHT_InnocentSpouse.pdf

    If you’re trying to do this on your own, I suggest that you ask your tax software support folks to help you. They will.

    Otherwise, you’d need to look for a course on the subject.

    I teach a course related to this – Innocent Spouse relief for tax pros.
    http://www.cpelink.com/resource/how-innocent-is-your-spouse/3999/
    But I don’t include a filled-in form.

    Good luck with this.

    For the future – just reduce your withholding and the IRS won’t be able to take your share of the refund.

    Hugs
    Eva

  2. shadyvr says:

    Hi dear,I was trying to fill out form 8379 and part III (standard deduction or itemized deduction),I have to put the amount on form 1040 I entered on line 40,but which amount I have to put in column (b) and column (c)?, also that would be great if I can see and example of a form 8397 already filled it out. Thank you so much!

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