What is the distinction between certified and non-qualified dividends? And which one may gain advantage you probably the most when submitting your taxes?
Retirement Daily’s Robert Powell caught up with Jeffrey Levine, CPA and tax professional from Buckingham Strategic Wealth Partners, to reply the query and talk about all the pieces you could learn about certified and non-qualified dividends.
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Quotes| Qualified Vs. Non-Qualified Dividends
Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth
Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth
Recommended Read: Is There a Dividend Tax? Your Guide to Taxes on Dividends
Video Transcript| Jeffrey Levine, CPA and Tax Expert, Buckingham Strategic Wealth
Robert Powell: What do taxpayers have to know in regards to the distinction between certified and non-qualified dividends? Well, right here to speak with us about that’s Jeffrey Levine from Buckingham Strategic Wealth. Jeffrey, welcome.
Jeffrey Levine: It’s good to be with you. Any time you have got a alternative between certified and non-qualified, normally, the tax code rewards you for one thing being certified. And that’s the case right here as nicely. Primarily, the distinction between certified and non-qualified dividends is the tax remedy that they obtain. Ordinary dividends are topic to atypical revenue tax charges, whereas certified dividends qualify to be taxed at long-term capital positive aspects charges.
Now, one factor that is actually attention-grabbing, although, for individuals once they go to file their tax returns is that certified dividends are literally included on the atypical revenue line of the tax return, after which additionally on the certified dividend line.
Robert Powell: Right, and the place that somebody will study, whether or not it is certified or non-qualified is the shape?
Jeffrey Levine: 1099-DIV, you’re going to get that out of your custodian. And oftentimes, the custodian will ship what they name a consolidated 1099, which incorporates curiosity, dividends, in addition to capital positive aspects. But yep, that’s the case. And solely sure investments qualify to obtain long-term capital positive aspects remedy as a certified dividend. It’s usually going to be a US firm and you need to meet sure holding necessities, holding durations, to ensure that these dividends to be thought of certified.
Editor’s Note: The content material was reviewed for tax accuracy by a TurboTax CPA professional.
Zach Faulds contributed to the writing of this text and produced the video and/or the graphics related to it.
Source: www.thestreet.com