Dividends

This should be an easy question, but I wasn't able to easily find the answer - dividends are taxed as capital gain income. Is that right?

Is that long term or short term capital gain?

Thanks.

___ Stu

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Reply to
Stuart A. Bronstein
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Dividends are taxed as ordinary income.

However, Qualified Dividends are taxed at the same rate as Long-Term capital gains.

But if you have capital losses, you cannot reduce any dividend income by that loss. (except up to 3000 of ordinary income can be reduced by capital losses.)

Reply to
Arthur Kamlet

Depends on whether qualified or non-qualified dividends. The special rate on qualified dividends (to my understanding, stock traded on DOW, NASDAQ, or AMEX, and held for 60 days, and not a REIT) as long-term (with a rate of 0% or 15%) is set to expire end of this year. So this is the last year of it, unless Congress and president act on extending it.

Reply to
removeps-groups

Easy? No way!

For tax year 2012, some dividends are ?qualified? and others are not. Qualified dividends are taxed at a lower (long-term capital gains) rate. Form 1099-DIV discriminates the two types.

Starting 2013, the distinction between the two goes away, unless the law changes.

For details, see

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and IRS publication 550 (2011), pages 21-22. Disclaimer: I?m not a tax pro, just another taxpayer.

Reply to
zvkmpw

Thanks Art and the others who responded. You've been a tremendous help.

___ Stu

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Reply to
Stuart A. Bronstein

I wonder if you were confused by all the news during the GOP primary, referring to most of Romney's income as being from dividends. I think they are a form of compensation from the venture capital business that is referred to as a kind of dividend, but are actually return of capital.

Reply to
Barry Margolin

No, I wasn't thinking about Romney. I got a question from a client, and I couldn't easily peg down the answer.

As far as Romney, my understanding is that most of what he gets these days in as a result of a buy-out of his interest in Bain Capital. If so, that all might legitimately be part return of capital, part capital gain.

___ Stu

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Reply to
Stuart A. Bronstein

[...] I got a question from a

This might be due to the fact that the calculation is well-hidden on the Form 1040. There is no indication that the tax on page 2 has been calculated on a "QDCGWS" (Qualified Dividend and Capital Gains Worksheet) instead of the tax tables, and the worksheet itself is not normally submitted to the IRS.

Don't forget also, as you probably know from being in CA, that state treatment may not conform to federal, for example CA does not have any special QD/CG rate, qualified dividends are taxed no differently than regular.

Reply to
Mark Bole

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