Question Regarding Dividend Classification

[Trooper]

Hi,

I have a small holding of VDIGX (VG Dividend Growth Fund) in our taxable portfolio.

Throughout the year we received dividends of $1,199.02, STCGs of $211.22, and LTCGs of $1,813.13.

On Vanguards 1099-DIV it lists:
Box 1a Total Ordinary Dividends $1,410.24
Box 1b Qualified Dividends $1,259.94

I know that VG lumps the STCG and dividends together in Box 1a, so $1,410.24 = $1,199.02 + $211.22. But how could the qualified dividends exceed total dividends?

[VanWinkle]

Quote:

Originally Posted by Trooper Hi, I have a small holding of VDIGX (VG Dividend Growth Fund) in our taxable portfolio. Throughout the year we received dividends of $1,199.02, STCGs of $211.22, and LTCGs of $1,813.13. On Vanguards 1099-DIV it lists: Box 1a Total Ordinary Dividends $1,410.24 Box 1b Qualified Dividends $1,259.94 I know that VG lumps the STCG and dividends together in Box 1a, so $1,410.24 = $1,199.02 + $211.22. But how could the qualified dividends exceed total dividends?

I was not aware of STCG being added to dividend amount on the 1099DIV.

[Onward]

Quote:

Originally Posted by Trooper But how could the qualified dividends exceed total dividends?

Ordinary dividends include qualified dividends.

Quote:

Originally Posted by Trooper I have a small holding of VDIGX (VG Dividend Growth Fund) in our taxable portfolio. Throughout the year we received dividends of $1,199.02

That's not a "small holding" in my book!

[zinger1457]

Quote:

Originally Posted by VanWinkle I was not aware of STCG being added to dividend amount on the 1099DIV.

The Ordinary Dividends (1099 box 1a) includes all your dividend payments throughout the year and short term capital gains. Those payments are not shown separately on the 1099.

[cathy63]

Quote:

Originally Posted by Trooper Hi, I have a small holding of VDIGX (VG Dividend Growth Fund) in our taxable portfolio. Throughout the year we received dividends of $1,199.02, STCGs of $211.22, and LTCGs of $1,813.13. On Vanguards 1099-DIV it lists: Box 1a Total Ordinary Dividends $1,410.24 Box 1b Qualified Dividends $1,259.94 I know that VG lumps the STCG and dividends together in Box 1a, so $1,410.24 = $1,199.02 + $211.22. But how could the qualified dividends exceed total dividends?

You will have to ask Vanguard to get the real answer, but I'd guess that either the amount they previously told you was STCGs was incorrect and some of that was really QDivs and they fixed their accounting before issuing the 1099; or the 1099 is incorrect and you'll be getting a corrected one in a few weeks.

[RunningBum]

Or maybe this year STCGs are not included in total dividends as they have been in the past?

[cathy63]

Quote:

Originally Posted by RunningBum Or maybe this year STCGs are not included in total dividends as they have been in the past?

If they didn't include STCGs this year, then that's an error and they'll have to issue a correction. Here are the IRS instructions for 1099-DIV issuers:

Box 1a. Total Ordinary Dividends
Enter dividends, including dividends from money market funds, net short-term capital gains from mutual funds, and other distributions on stock. Include reinvested dividends and section 404(k) dividends paid directly from the corporation. Include as a dividend the amount of the recipient's share of investment expenses that you report in box 5.

[MichaelB]

For some of us, Vanguard transitioned accounts this year from separate brokerage / Vanguard funds into one single account. The 1099 DIV statement reflects only the dividends paid before that account change, which means it only includes the June distribution for VDIGX. The Sept and Dec distributions will be included on the separate Vanguard Brokerage summary 1099 which is yet to come.

I like Vanguard, but this is confusing. It wouldn't hurt them to let their account holders know this - I figured it out because of this thread.

Edit to add - it appears they did notify me. Online, in the tax reports section, next to the link to my 1099-DIV there is a double asterisk, with this notice at the bottom of the page in small print

Quote:

**Includes tax forms from your mutual fund accounts before your mutual fund assets were transferred into an upgraded brokerage account.

[Trooper]

Quote:

Originally Posted by MichaelB For some of us, Vanguard transitioned accounts this year from separate brokerage / Vanguard funds into one single account. The 1099 DIV statement reflects only the dividends paid before that account change, which means it only includes the June distribution for VDIGX. The Sept and Dec distributions will be included on the separate Vanguard Brokerage summary 1099 which is yet to come. I like Vanguard, but this is confusing. It wouldn't hurt them to let their account holders know this - I figured it out because of this thread. Edit to add - it appears they did notify me. Online, in the tax reports section, next to the link to my 1099-DIV there is a double asterisk, with this notice at the bottom of the page in small print [/FONT][/COLOR]

Thanks MichaelB but I don't believe that applies to me. Here's a brochure published by Vanguard that explains the 1099-DIV, but doesn't explain my situation.

https://personal.vanguard.com/pdf/1099DIV_012018.pdf

Quote:

Originally Posted by cathy63 You will have to ask Vanguard to get the real answer, but I'd guess that either the amount they previously told you was STCGs was incorrect and some of that was really QDivs and they fixed their accounting before issuing the 1099; or the 1099 is incorrect and you'll be getting a corrected one in a few weeks.

Most likely I will need to ask. The amount of STCGs shown on my 1099-DIV matches the amount shown in my "Dividends and Capital Gains Summary" online.

[N02L84ER]

Quote:

Originally Posted by Trooper Hi, I have a small holding of VDIGX (VG Dividend Growth Fund) in our taxable portfolio. Throughout the year we received dividends of $1,199.02, STCGs of $211.22, and LTCGs of $1,813.13. On Vanguards 1099-DIV it lists: Box 1a Total Ordinary Dividends $1,410.24 Box 1b Qualified Dividends $1,259.94 I know that VG lumps the STCG and dividends together in Box 1a, so $1,410.24 = $1,199.02 + $211.22. But how could the qualified dividends exceed total dividends?

I have the exact same type of results and I had the same thing happen in previous years. I never get corrected 1099-DIVs. Since I haven't purchased any new shares in many years, I think some/most of the STCGs are considered qualified or they should have been reported as dividends originally. I have never bothered to call and ask because the amounts are so small. HTH

[Taxman59]

The mutual fund companies report distributions throughout the year. At the end of the year they allocate expenses against the LTCG, STCG and Dividends. It is possible that the allocation used on the 1099-DIV was different than the monthly statements.