Determining Qualified Dividends

[RASAP]

Is there a way to determine how much of the dividends I have received for 2019 will be Qualified? I know this information will be provided when I get my 1099-DIV in January, but I would like to know what my Qualified Dividends will be today.

Thanks,
Bill

 

[Golden sunsets]

The way that I determine my Qualified dividends in advance is to review last year's detailed 1099 from the brokerage that holds the assets. Knowing which equities are qualified I can then go through the current year's brokerage income and separate out those dividends that will be qualified. Depending on your brokerage, they may keep a running total on that number. It is usually listed as something like "Realized Gains, Losses, Dividends and interest". Those totals may only update monthly so you might have to add in any December qualified dividends already realized, or will be realized in the next couple of days.

 

[Sunset]

bing is your friend:

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;

Translated (IMHO): if you own the shares at least 61 days before ex-dividend date then the dividend is qualified. (obviously you have to own them on ex-dividend date to get the dividend)

 

[pb4uski]

^^^ This is true for common stock, but for mutual funds it is driven by the nature of the underlying investments.... for example, dividends from a bond fund are not qualified.

So you need to smartly interpret what bing or google is telling you.

 

[mn54]

if you own the shares through Fidelity they will tell you the breakdown of qualified and non-qualified dividends.

 

[audreyh1]

Is there a way to determine how much of the dividends I have received for 2019 will be Qualified? I know this information will be provided when I get my 1099-DIV in January, but I would like to know what my Qualified Dividends will be today.

Thanks,
Bill

The best estimate I know is to see what percentage of DIVs was qualified the prior year. I use that for my Jan estimated tax payment.

For MAGI purposes whether ACA or IRMAA qualifies or not makes no difference since they use AGI.

Fidelity does list them in their online tax information, but in Jan and only for some of the funds before Jan 15. The non-Fidelity funds don’t all report to Fidelity until later in Jan. But at least I get this info way before my late March 1099.

 

[RASAP]

Sunset, yeah, I read that and it made my brain itch a little and in the end I still couldn't come up with the numbers that were on my 2018 1099-DIV form.

Let me explain in a little more detail what I am looking for...

Last year (2108), one of my mutual funds paid me $4,694.36 in dividends. It wasn't until I received my 1099-DIV in January of 2019 that I found out the Qualified Dividends for that fund was $4,413.17.

Fast forward to this year, this same fund paid me $4,396.29. How can I determine what the Qualified Dividends will be for that amount (the equivalent of the $4,413.17 for 2018)?

In case it matters, this is a fund I have not made any contributions to in several years. I have however, sold some of the shares throughout the year.

 

[bobandsherry]

Sunset, yeah, I read that and it made my brain itch a little and in the end I still couldn't come up with the numbers that were on my 2018 1099-DIV form.



Let me explain in a little more detail what I am looking for...



Last year (2108), one of my mutual funds paid me $4,694.36 in dividends. It wasn't until I received my 1099-DIV in January of 2019 that I found out the Qualified Dividends for that fund was $4,413.17.



Fast forward to this year, this same fund paid me $4,396.29. How can I determine what the Qualified Dividends will be for that amount (the equivalent of the $4,413.17 for 2018)?



In case it matters, this is a fund I have not made any contributions to in several years. I have however, sold some of the shares throughout the year.

Did you own that fund in 2017? If so, was % of qualified in 2017 same/similar to 2018? If so good chance it's similar for 2019.

 

[pb4uski]

Sunset, yeah, I read that and it made my brain itch a little and in the end I still couldn't come up with the numbers that were on my 2018 1099-DIV form.

Let me explain in a little more detail what I am looking for...

Last year (2108), one of my mutual funds paid me $4,694.36 in dividends. It wasn't until I received my 1099-DIV in January of 2019 that I found out the Qualified Dividends for that fund was $4,413.17.

Fast forward to this year, this same fund paid me $4,396.29. How can I determine what the Qualified Dividends will be for that amount (the equivalent of the $4,413.17 for 2018)?

In case it matters, this is a fund I have not made any contributions to in several years. I have however, sold some of the shares throughout the year.

$4,413.17/$4,694.36*$4,396.29 should give you a pretty good estimate.

 

[Sunset]

....

Last year (2108), one of my mutual funds paid me $4,694.36 in dividends. It wasn't until I received my 1099-DIV in January of 2019 that I found out the Qualified Dividends for that fund was $4,413.17.

.....

Because it's a mutual fund, the best solution (guess) is to do what others have said and apply the percentage from last year to this year.

Reason is that a mutual fund is a lot like a black box, the manager may trade shares at will, and so it's reasonably impossible to predict the final qualified dividends accurately.
Best guess is the manager will act much like they acted the previous year in terms of trades.

 

[scrabbler1]

I have used that same ratio method when helping my (snake-bit) friend out with his income taxes. His holdings in non-Fido mutual funds are pretty small, so just coming pretty close is good enough for now.

 

[RunningBum]

What is the reason you need/want to know? Either way it counts towards MAGI, so for anything like stopping short of the ACA subsidy cliff, or IRMAA, it really doesn't matter.

For estimated taxes, the key word is "estimated". Using historical ratios like pb4's post above mine is probably good enough. If you're just using safe harbor based off last years taxes, you don't even care.

Any other reason?

 

[googily]

Here's Vanguard's page with year-to-date QDI estimates:

https://advisors.vanguard.com/VGApp/iip/advisor/csa/investments/taxcenter/yeartodate

 

[Marc]

In the past, Fidelity's initial statement did not have the breakout of qualified versus non-qualified. It has been as late as March before Fidelity sent out a revised 1099-DIV with correct information. They have warned me each time that the statement would be revised.

Marc

 

[LOL!]

The answer has been given:

For mutual funds and ETFs: Look at the current estimates published by the sponsors of these things AND also look at the past history of QDI percentages.

Also be aware of your personal holding period which must also be met. Some folks don't realize that the personal holding period is NOT how long you hold the dividends. It is how long you own the share(s) that paid the dividends and can span time before and after the dividend was paid and across calendar years.

One more thing: For international funds that pay dividends, you will not know the actual amount of the dividend until you get the 1099-DIV because the amount of the dividend that hits your account is too low due to foreign taxes removed before you even see it paid to you. I add another 7% or so to the dividend I get to adjust the total amount of the dividend paid to me until I get the 1099-DIV. This additional unseen money could put one over a cliff. One can also look at the historical tax rate for the foreign taxes removed from your dividend either in a 1099-DIV statement from last year or on the sponsor's web site.

 

[audreyh1]

In the past, Fidelity's initial statement did not have the breakout of qualified versus non-qualified. It has been as late as March before Fidelity sent out a revised 1099-DIV with correct information. They have warned me each time that the statement would be revised.

Marc

I have found that Fidelity starts posting the qualified dividends and foreign tax credit info for their funds early in Jan. It can be found online in the YTD tax information link found under more.... tab. By late January the non-Fidelity fund information also shows up on the Fidelity site.

 

[pb4uski]

My foreign taxes paid/foreign tax credit ended a little less than what I estimated, however, I did have one interesting surprise in my 1099-DIV.... Vanguard Total Stock included Section 199A dividends that I had never seen before and I got a QBI deduction for 20% of the Section 199A dividends... a pleasant surprise.

TI is $105 less than I expected... about evenly split between estimating error on foreign taxes paid and the surprise QBI deduction and a couple other small things... $105 of roth conversions that I could have done and missed out on!

 

[Sunset]

....
TI is $105 less than I expected... about evenly split between estimating error on foreign taxes paid and the surprise QBI deduction and a couple other small things... $105 of roth conversions that I could have done and missed out on!

Pretty excellent estimating

 

[Trooper]

My foreign taxes paid/foreign tax credit ended a little less than what I estimated, however, I did have one interesting surprise in my 1099-DIV.... Vanguard Total Stock included Section 199A dividends that I had never seen before and I got a QBI deduction for 20% of the Section 199A dividends... a pleasant surprise.

TI is $105 less than I expected... about evenly split between estimating error on foreign taxes paid and the surprise QBI deduction and a couple other small things... $105 of roth conversions that I could have done and missed out on!

Just looked at my Vanguard 1099-DIV and saw the same Section 199A dividend for VTSAX. How is this handled for tax purposes? Edited:
My quick research said something about REITs which I had trouble associating with VTSAX.

And what is the "QBI deduction" for same? Should I be happy or sad LOL? Good estimating BTW.

 

[audreyh1]

Yes, I got a nice chunk of 199A dividends, which makes my REIT funds quite a bit more tax efficient as only 80% of my REIT dividends are taxed.

My mid cap and small cap index funds also reported some 199A dividends.

My initial estimate based on last year’s ratio of qualified dividends per fund was extremely close to what has now been reported. So I was very pleased using that approach.

 

[audreyh1]

Just looked at my Vanguard 1099-DIV and saw the same Section 199A dividend for VTSAX. How is this handled for tax purposes? Edited:
My quick research said something about REITs which I had trouble associating with VTSAX.

And what is the "QBI deduction" for same? Should I be happy or sad LOL? Good estimating BTW.

REITs are present in the S&P500 index as well as broader market indexes.
https://www.reit.com/data-research/reit-indexes/reits-sp-indexes

 

[SecondCor521]

Just looked at my Vanguard 1099-DIV and saw the same Section 199A dividend for VTSAX. How is this handled for tax purposes? Edited:
My quick research said something about REITs which I had trouble associating with VTSAX.

And what is the "QBI deduction" for same? Should I be happy or sad LOL? Good estimating BTW.

QBI deduction is a 20% deduction on certain business income. Also known as a Section 199A deduction. Apparently, and I didn't know this, you can take the deduction on your taxes if you owned a REIT inside your mutual fund. Probably the REIT and the mutual fund are treated as passthru entities, so the credit flows from the REIT through the mutual fund to the taxpayer.

Give you'd be paying less taxes, you probably would be happy about it.

People probably should check their K-1s for this as well. I think QBIs can pass through there as well.

ETA: Look in box 5 of your 1099-DIV. For K-1s it looks like it will be in box 14, code I and there may be an attached statement.

 

[audreyh1]

In last years 1040 20% of our 199A dividends were added to the standard deduction which is then subtracted from AGI before computing taxes. Nice!

 

[RASAP]

I plugged the 199A amounts into TurboTax. Didn't seem to change anything.

 

[SecondCor521]

I plugged the 199A amounts into TurboTax. Didn't seem to change anything.

Sometimes it won't. Either line 10 on your Form 1040 is zero (meaning you didn't get the QBI deduction for some reason), or you've already reduced your taxable income to zero (1040 line 11b). You can't create negative taxable income with a QBI deduction.