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gregory-linderma
New Member

How can dividends be both Ordinary AND Qualified... I thought it was one or the other.

Box 1a (Ordinary Dividends) and 1b (Qualified) are the same on my 1099DIV. I thought it was one or the other? They get taxed at different rates so I need to know where to put them! Thanks!
4 Replies
macuser_22
Level 15

How can dividends be both Ordinary AND Qualified... I thought it was one or the other.

The 1099-DIV is correct.  Box 1b says what part of box 1a is qualified.  In your case all of box 1a is qualified.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
gregory-linderma
New Member

How can dividends be both Ordinary AND Qualified... I thought it was one or the other.

So just so I understand; ordinary is taxed at my tax bracket and qualified is taxed at the appropriate capital gains level, correct? And capital gains is 0% for the 10/15% tax brackets, right?
macuser_22
Level 15

How can dividends be both Ordinary AND Qualified... I thought it was one or the other.

See Ordinary Dividends & Qualified Dividends
Here in IRS Pub 17:
<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p17/ch08.html#en_US_2015_publink1000171583">https://www.irs.gov/pub...>

Ordinary Dividends

Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. They are paid out of earnings and profits and are ordinary income to you. This means they are not capital gains. You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive.
Qualified Dividends

Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. They should be shown in box 1b of the Form 1099-DIV you receive.

The maximum rate of tax on qualified dividends is:

    0% on any amount that otherwise would be taxed at a 10% or 15% rate.

    15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39.6%.

    20% on any amount that otherwise would be taxed at a 39.6% rate.

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 are not of the type listed later under Dividends that are not qualified dividends .

    You meet the holding period (discussed next).
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
Frarnk118
New Member

How can dividends be both Ordinary AND Qualified... I thought it was one or the other.

Why they tax  both Ordinary dividents and Qualified dividents?

On $2,063 Turbo tax is asking me to pay  >$412 for taxes? 

This does not seem right!   I can not talk to a human when I call Turbo support.

Please somebody answer me before I file the 2019 income tax. 

Frank 118

[email address removed]

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