1099 forms from stock trading contain qualified and non-qualified dividends.
Base on what I understand, these values are not accurate and should not be used since qualified dividend needs to meet a holding period.
1. I don’t see Turbotax ask or give any hint to declare qualified dividend. Turbotax just import all data from broker (give Turbotax username and password, then it log in and auto import). This situation put the users to the risk of violate the holding period.
2. If this
is Turbotax limitation, I must manual calculate what items are qualified, what
are not. If so, how can I enter these values to Turbotax?
3. The qualified dividends that manual calculate will be different with qualified dividend list in 1099 form from broker. Does it trigger any flag from IRS?
What's the name of the broker issuing you the 1099-DIV? You may want to talk to them and determine if what you're reporting seeing "... these values are not accurate..." is, in fact, the case.
A dividend being qualified or not is determined by a basic formula: If the shares are owned for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date, then the dividend is qualified; otherwise it is not.There are more rules:
Another requirement is that the shares be unhedged; that is, there were no puts, calls, or short sales associated with the shares during the holding period.
All of the following requirements must be met:
The fund must have held the security unhedged for at least 61 days out of the 121-day period that began 60 days before the security’s ex-dividend date. (The ex-dividend date is the date after the dividend has been paid and processed and any new buyers would be eligible for future dividends.)
For certain preferred stock, the security must be held for 91 days out of the 181-day period, beginning 90 days before the ex-dividend date. The amount received by the fund from that dividend-generating security must have been subsequently distributed to you.
You must have held the applicable share of the fund for at least 61 days out of the 121-day period that began 60 days before the fund’s ex-dividend date.
You must have held those shares of stock unhedged for at least 61 days out of the 121-day period that began 60 days before the ex-dividend date.
For certain preferred stock, the security must be held for 91 days out of the 181-day period beginning 90 days before the ex-dividend date.
2. After finish, I came back to Turbotax many time to looking for any way to enter non-qualified dividend but I couldn't find out any.
3. Look like this is limitation of Turbotax and it need to be upgrade. Turbotax said the user don't need to know any about tax, just follow its guideline to do. If so, for each dividend item, Turbotax should have a form so user can enter data to find out if it is qualify or not. Or Turbotax should have function to auto detect if qualified or not since all data relate to share, buying date, selling date available.
Interesting discussion and applicable to me given I am preparing my return now and have the same concern regarding the 199A dividends not meeting the holding period. Once question that was not answered is whether adjusting the 199A dividends for a lower amount due to inaccurate reporting would trigger an audit given a mismatch in reported amounts - does anyone have any thoughts on this? Thank you
I am trying to understand non-qualified dividends as well. It seems there is another factor to consider, if the option is in the money or not at the time of the ex dividend date. I am having trouble determining if this rule is based on option (sell covered call) being in money at the time it is opened to result in the non-qualified rate, or if the call moves into the money at some time before it expires pays an ex dividend during the time it is in the money. Any assistance would be appreciated
Let's try an example:
September 9 An investor buys 100 shares of XYZ common stock for $58
October 12 The stock price closes at $56
October 13 The investor writes an XYZ December 55 call
This option is an in-the-money qualified covered call
November 14 The investor closes the XYZ December 55 call by making a closing purchase
November 16 XYZ stock goes ex-dividend to shareholders of record on November 18
December 2 The investor sells the XYZ stock
- The investor is not entitled to the 15% rate on the dividend, because the stock was not held for 61 days during the required 121-day period.
- The stock was deemed to be held from September 9 to October 13 (34 days) and from November 14 to December 2 (17 days) for a total of 51 days.
- The period from October 13 to November 14 is not included in the holding period because of the in-the-money covered call.
Note: Writing an at-the-money or out-of-the-money covered call allows the holding period of the stock to continue. In the example above, had a 42.50-strike call or a 45-strike call been written with the stock price at $41, then the investor would have met the holding period requirement to be eligible for the lower tax rate of qualified dividends.
I recommend that you seek the advice of a Licensed Financial Adviser, because this isn't an area of TurboTax expertise.
Please see Covered Call Qualified Dividend
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