Qualified vs non qualified dividents

[Polina_u]

Hi!

Please advise what is the best way to find qualified vs non qualified dividends. Should I check per share or there are better ways? Thank you.

[DawnC]

On Form 1099-DIV, qualified dividends are found in Box 1b.   Dividends are separated into two classes by the IRS, ordinary and qualified. A dividend is considered to be qualified if you have held a stock for more than 60 days in the 121-day period that began 60 days before the ex-dividend date.   Internal Revenue Service. Publication 550.

It is an ordinary dividend if you hold it for less than that amount of time.   The ex-dividend date is one market day before the dividend's record date. The record date is the date at which a shareholder must be on the company's books to receive the dividend.

Certain dividend payments aren't qualified dividends, even if they're reported as such. These are listed in IRS Publication 550 under the "Dividends that are not qualified dividends" section, and they typically include capital gains distributions and dividends you receive from a farmers' cooperative.  They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV.

Dividend Tax Guide

[Polina_u]

Thank you!

I got stuck at this step in turbo tax: "Let's enter any dividends that meet the holding period requirement"

Then I need to fill two boxes:

Dividends that meet the 60/90 day holding period

Dividends that meet the 45 day holding period

I'm not sure why I'm asked about this after I already entered all the data from 1099-DIV

[DawnC]

Are you still in the 1099-DIV entry screen, or are you somewhere else in TurboTax?   Form 1099-DIV should show you the details (ex-dividend date/holding period) of your qualified dividends.   Qualified dividends are a special type of dividend that often receive preferential tax treatment.  They’re taxed as long-term capital gains (the rates are 0%, 15%, and 20%).

In order to be considered qualified dividends, they must:

• Be paid by an American company or a qualifying foreign company
• Be paid between January 1, 2023 and December 31, 2023
• Meet the holding period requirement for the stock—the holding period is at least 60 days during the 121-day period that begins 60 days before the ex-dividend date (the day after a company announces its dividend payments to shareholders)

Generally, form 1099-DIV provides the details of qualified dividends.

Nonqualified (ordinary) dividends don’t receive any special tax treatment, they’re taxed as ordinary income.