Quick Question -- Is a stock dividend taxable on the Record Date or the Payable Date ??

[FiveDriver]

Equiniti Shareholder Services sent us a confusing bit of correspondence.
We had received an 'official' 1099-DIV from EQ back in October 2024.

Now, an Account statement for Merck shares with a Record Date of December 16 2024 and a Payable Date of January 8th 2025.
I believe this is just advising us that a Dividend has been declared in December, and Payable in January.
Are Dividends taxable on the Record Date or the Pay Date ??

Equiniti has the most confusing documentation I have ever seen.

 

[Jerry1]

To me, the answer is always to use the 1099 for tax prep unless you see an obvious error. My assumption is that what’s on the 1099 is based on paid date but I’m not certain. I wouldn’t use a statement to override the 1099. If the 1099 is in error you would want to ask for a corrected 1099.

 

[audreyh1]

On the paid date. It doesn’t matter when they are declared.

I’m scratching my head as to why you would receive a 2024 1099-DIV in Oct 2024.

 

[FiveDriver]

On the paid date. It doesn’t matter when they are declared.

I’m scratching my head as to why you would receive a 2024 1099-DIV in Oct 2024.

Yes, dated October 7th 2024. I'm sure Merck isn't the only company on planet Earth that pays Dividends in January, April, July and October.

If it wasn't for DW's cogent filing system -- that 1099-DIV would have been lost forever.

 

[audreyh1]

I like holding shares at a brokerage. Consolidated 1099s covering the whole tax year early the following year.

 

[thod]

When issuing dividends, companies announce them (which may or may not move the stock price).
When announced there is an ex-dividend date and a payable date. So the dividend amount is announced, to be paid on the payable date to stockholders of record on the ex-dividend date. The stock price usually drops after hours by the dividend amount on the ex-dividend date.

So, I would assume the date that counts is the ex-dividend date, not the payable date.

 

[MarieIG]

Equiniti Shareholder Services sent us a confusing bit of correspondence.
We had received an 'official' 1099-DIV from EQ back in October 2024.

Now, an Account statement for Merck shares with a Record Date of December 16 2024 and a Payable Date of January 8th 2025.
I believe this is just advising us that a Dividend has been declared in December, and Payable in January.
Are Dividends taxable on the Record Date or the Pay Date ??

Equiniti has the most confusing documentation I have ever seen.

I'm "guessing" that this is because your dividends had been finalized by the time the 1099-DIV was issued. I am not a fan of Equiniti.

 

[ut2sua]

When issuing dividends, companies announce them (which may or may not move the stock price).
When announced there is an ex-dividend date and a payable date. So the dividend amount is announced, to be paid on the payable date to stockholders of record on the ex-dividend date. The stock price usually drops after hours by the dividend amount on the ex-dividend date.

So, I would assume the date that counts is the ex-dividend date, not the payable date.

The IRS doesn't think like this ^^^
The IRS only care when you receive the $
There may be exceptions, but the above is generally how taxes work in the US

 

[FiveDriver]

I'm "guessing" that this is because your dividends had been finalized by the time the 1099-DIV was issued. I am not a fan of Equiniti.

Their Logo 'EQ' stands for Everything is Quazy.

 

[JCH10400]

On the paid date. It doesn’t matter when they are declared.

I’m scratching my head as to why you would receive a 2024 1099-DIV in Oct 2024.

Many years ago I received a small number of shares in a life insurance company as a result of their conversion from being a "mutual" to being publicly traded. The insurance company placed the shares in a company called "Computershare" with instructions that I could leave the shares there or transfer them to my broker at a fee. Computershare would pay the dividends and issue a 1099 as soon as the last quarterly dividend was paid, which if I remember correctly was declared in September and paid in October.

 

[Sunset]

^^^^^^ Computershare should really be called ComputershareTrap ! As it's such pain to get your shares or $$ out of for many people.

 

[Sunset]

As to OP the official 1099 is what counts.
It's based on paid date.