Are Overseas dividends qualified?

3 replies
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Hi, I have overseas stocks, how do I report them? Ordinary or qualified dividends?

TurboTax Premier Windows

Answer

Foreign (overseas) dividends are "qualified" dividends under United States tax law, according to the IRS, if the following requirements are met:

The (foreign) corporation is also incorporated in a U.S. possession.
The foreign corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose, and that includes an exchange of information program.
The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States.

For further details on that, you can refer to IRS Publication 17 (2016). A courtesy link to the relevant section of that document is included below:

https://www.irs.gov/publications/p17/ch08.html#en_US_2016_publink1000171592

In short, the dividends paid by most larger foreign companies, and publicly traded foreign companies, will satisfy the US definition of "qualified dividends," and are thus eligible for reduced tax rates.

Thank you for asking this important question.

Anonymous

Answer

Foreign (overseas) dividends are "qualified" dividends under United States tax law, according to the IRS, if the following requirements are met:

The (foreign) corporation is also incorporated in a U.S. possession.
The foreign corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose, and that includes an exchange of information program.
The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States.

For further details on that, you can refer to IRS Publication 17 (2016). A courtesy link to the relevant section of that document is included below:

https://www.irs.gov/publications/p17/ch08.html#en_US_2016_publink1000171592

Thank you for asking this important question.

noodad

Level 5

This is helpful, but unfortunately it isn't possible for any corporation to meet all of those three conditions.

However, according to IRS publication 17, the corporation is qualified if it meets any of those conditions.

Critter

Level 15

From the pub 17 :

To qualify for the maximum rate, all of the following requirements must be met.

The dividends must have been paid by a U.S. corporation or a qualified foreign corporation. (See Qualified foreign corporation , later.)
The dividends aren't of the type listed later under Dividends that aren't qualified dividends , later.
You meet the holding period (discussed next).