Are you allowed not to declare a dividend as a qualified dividend?

[dvnieuwe]

If you have a dividend that is qualified can you opt not to declare the qualified dividend part so that it will be taxed at the normal rate instead of the reduced rate? In my particular case it would increase my return.

[Bsch4477]

No.  You have to report the dividend as you see it on the 1099-DIV. 

[dvnieuwe]

And what if you don't have a 1099-DIV for that dividend (foreign company dividend), do you have to report it as qualified if it satisfies the rules or not?

[fanfare]

You, the taxpayer, determine the amount of qualified dividends on line 3a.

it may be anywhere from 0% to 100%. of the qualified amount shown on 1099-DIV.

@dvnieuwe 

[dmertz]

How can treating the dividends as short-term capital gains instead of long-term capital gains possibly increase your tax refund?  That doesn't seem to make any sense.

[dvnieuwe]

@dmertz @fanfare @Bsch4477 

Suppose you have $21000 foreign sourced qualified dividend on which you paid 15% foreign tax because of a treaty with the US. Then you need to fill in form 1116 if you want to get a tax credit, but those rules state that if you have more than $20000 of foreign sourced qualified dividend you have to adjust the amounts with 0.4054 .

Declaring the $21000 as qualified yields a return that is $500 lower compared to declaring it as ordinary, hence my question whether I can choose to declare or not declare the qualified dividend part? Please note that I do not have a 1099-DIV as the foreign company shares are not publicly traded. Previous years the amount received was lower and I always declared it as qualified, but this is the first year I ran into exceeding that 20k threshold.

[rogge1722]

You are referring to the form 4952 and form 1116 strategy whereby qualified dividends can be characterized as ordinary dividends which will increase your tax liability but in return foreign qualified dividends are treated as ordinary dividends and not subject to adjustment. The increase in foreign tax credit will have an overall reduction in the tax liability.

This requires form 4952 and the schedule D tax worksheet in lieu of the default qualified dividends and capital gain worksheet. The IRS is aware of this strategy and mentions it in the form 4952 instructions.