1099 Div "surprises"

[walkinwood]

- I learned this year that (for Vanguard's VFSUX, at least) the Short-Term Cap gains are included in the 1099-DIV.

- For funds with non-US securities, Foreign taxes paid are added to the sum of distributions in your 1099DIV. So, if you're estimating your 1099-DIV based on distributions, remember to add an estimate of foreign taxes paid. Use prior years to get a percentage for that fund. (In another thread, someone suggested 7%)

Are there any other "surprises" hidden in the 1099-DIV (or other 1099 statements)?

The "hidden additions" are particularly important for those managing MAGI for ACA since there is no ROTH-IRA recharacterization this year, so you have to get it right before 12/31. $1 over the 400% of poverty line (plus HSA contributions if you're eligible) and you could lose out on many thousands of dollars.

 

[zinger1457]

- I learned this year that (for Vanguard's VFSUX, at least) the Short-Term Cap gains are included in the 1099-DIV.

Are you referring to Short Term Capital gains being included in Ordinary Dividends on the 1099-DIV? That's always been the case for the funds I own.

 

[gerntz]

- I learned this year that (for Vanguard's VFSUX, at least) the Short-Term Cap gains are included in the 1099-DIV.

- For funds with non-US securities, Foreign taxes paid are added to the sum of distributions in your 1099DIV. So, if you're estimating your 1099-DIV based on distributions, remember to add an estimate of foreign taxes paid.

Tt Premier handles this.

 

[aza455]

Tt Premier handles this.

TurboTax doesn’t separate short term gains from the dividends. It imports Vanguard data just as they are presented by Vanguard.

Does anyone know why Vanguard lumps the short term gains together with the dividends?

 

[pb4uski]

Are you referring to Short Term Capital gains being included in Ordinary Dividends on the 1099-DIV? That's always been the case for the funds I own.

+1. I think it may be required.

 

[audreyh1]

TurboTax doesn’t separate short term gains from the dividends. It imports Vanguard data just as they are presented by Vanguard.

Does anyone know why Vanguard lumps the short term gains together with the dividends?

For mutual funds short term capital gains distributions are always lumped in with the dividends. Doesn’t seem fair as one might have short-term capital losses to offset those short-term cap gains distributions, but that is apparently how tax law works for mutual funds.

 

[walkinwood]

Are you referring to Short Term Capital gains being included in Ordinary Dividends on the 1099-DIV? That's always been the case for the funds I own.

Yes - only clueless me never realized it till a few days ago (or I realized it once and now its new to me - all over again). And I've been doing my taxes myself for years

 

[pb4uski]

But why does it matter? Both are income... albeit taxed at different rates.

 

[LOL!]

TurboTax doesn’t separate short term gains from the dividends. It imports Vanguard data just as they are presented by Vanguard.

Does anyone know why Vanguard lumps the short term gains together with the dividends?

Sure, there is a law that says that is what they are required to do.

As for the foreign taxes, that can be problematic for folks trying not to fall up over a cliff. There are usually about a dozen threads claiming a mistake on the 1099-DIV or at least asking why the box 1 number is higher than what they got in their account statement. Long-term readers of this forum have read those posts each year.

 

[RunningBum]

But why does it matter? Both are income... albeit taxed at different rates.

Because as audrey says, you might have more than $3K losses that could offset the STCGs.

For mutual funds short term capital gains distributions are always lumped in with the dividends. Doesn’t seem fair as one might have short-term capital losses to offset those short-term cap gains distributions, but that is apparently how tax law works for mutual funds.

 

[ocean view]

The ST or LT character of a mutual fund’s realized capital gains do not pass through to the MF shareholders upon distribution. The distributed capital gain is more properly described as “a dividend distribution, where the distributed income was generated from a realized capital gain”. This is my description of transaction, but that’s too many words, so they just call it a capital gain distribution.

Here’s an article that more clearly describes the tax treatment of this income
https://www.thebalance.com/mutual-fund-short-term-capital-gains-distributions-2466687

 

[jebmke]

Yes - only clueless me never realized it till a few days ago (or I realized it once and now its new to me - all over again). And I've been doing my taxes myself for years

Aha!


It is good practice to reconcile your tax statements to your financial statements. You would have detected this much earlier.


It is also a good way to figure out if you have received all the 1099s etc. You should be able to reconcile all tax statements to financial statements. W2 recons to pay stub can get tricky if an employer makes adjustments such as imputed income. But investment statements should be a walk in the ... park.

 

[audreyh1]

But why does it matter? Both are income... albeit taxed at different rates.

It matters, because if you have short term capital losses, you can’t take them against your short term capital gains distributions, so you have to take them against your long term gains or be limited by the $3000 against ordinary income.