1099-DIV both 1a and 1b are equal but included as Ordinary Dividends instead of Qualified Dividends on step-by-step summary screen and Schedule B. Please explain why?

[patzpagano]

On my 1099-DIV both 1a and 1b are equal indicating it is all qualified dividends.  However, on the step-by-step summary screen the amount is listed under "Ordinary Dividends."  Is it treated as qualified dividends even though it displays under ordinary dividends?  (Corollary: why isn't there a column for qualified dividends?).  Looking at Schedule B, it is listed under Part II - Ordinary Dividends. Please explain why it is treated as ordinary when it's qualified.

[SteamTrain · Accepted solution]

It is being treated correctly, but I agree it can be more than just a bit misleading to look at just that form....and the IRS isn't making things easier for normal human beings to comprehend what the heck they are doing by listing it all right there.

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Look at your form 1040.  Line 9a is your total dividends....ordinary or otherwise, and 9b is the sub-portion that are also  considered qualified.    And 9b can be equal to, or lower than 9a.  At this point, no consideration is being given to the 9b value

9a is included in all your total AGI, but it still isn't telling you how it is being taxed differently based on the 9b value.

What happens doesn't occur until you get down to line 43.  

IF line 43 is a zero, because all your exemptions and deductions erase all your taxable income, then the tax return doesn't care what your qualified dividends are....you have no taxes anyhow.

IF line 43 is a positive number, then, in your situation, a special tax form is used to calculate your taxes.  The "Qualified Dividends and Capital Gain Tax Worksheet" is used, which will only now take into consideration those qualified dividends,(and any capital gains you get too) into consideration for either zero taxes, or a lowered tax rate, depending on your particular set of data.

IF you look at that worksheet, you'll see your 9b $$ right there on line 2 of the worksheet....(the rest of the worksheet just gives me brain cramps.)

[patzpagano]

That's it exactly!  Thank you!

[rd2]

Using Turbo tax. Under income it says Stocks, mutual funds, bonds, other. I have a 1099-Div that has 1a (total)  & 1b (qualified) which one do I use?

[SteamTrain]

@Judi.day

It doesn't go in as "Stocks, mutual funds, bonds, other"...that is entirely the wrong place

It goes in as a 1099-DIV form. in the Interest and Dividends section.

DON'T go using the brain-dead "Guide Me".....you need to expand the full menu on the "Wages&Income" page and there is a line which is labelled "Dividends on 1099-DIV".  (So easy to find...once you figure out how to expand to see the full menu)