Double entry and double taxation?

That's where you went wrong. When you have qualified dividends, you do NOT compute the tax on taxable income. Instead, you complete 1040 up to but not including the "tax" line and then you go to the Qualified Dividends and Capital Gain Worksheet, compute your *total* tax there, and enter the number you get there into the

Assuming you did the worksheet properly, $2,749 *is* your tax. Note the line says "tax on *all* taxable income".

No, because if you did the form correctly there is *no* "existing data" on Form 1040 line 44 at this point.

No, because the $7,491 shouldn't have been there in the first place.

It's not.

-- Rich Carreiro snipped-for-privacy@animato.arlington.ma.us

Please note: I posted here, then realized with a moderated ng, you may not post my message with a munged address. So I then found ustaxes, and posted there. I certainly did not intend to crosspost. I believe I was answered there. To summarize: Qualified dividends go in 9b of 1040 and then to the Qualified dividend worksheet, the resulting tax from that worksheet is the *only* tax on line 44 of 1040. What continues to bother me is Vanguard sends me/IRS a

ms

You enter the total dividends, from box 1a, on line 9a. Then, you enter the qualified dividends, from box 1b, on line 9b. You do not add line 9b to other income to arrive at your adjusted gross income. You may be creating a double tax situation but that is not what the form calls for. Lanny K. Williams, CPA Nawarat, Williams & Co., Ltd. Income Tax Services for Expatriate Americans

You enter the total dividends, from box 1a, on line 9a. Then, you enter the qualified dividends, from box 1b, on line 9b. You do not add line 9b to other income to arrive at your adjusted gross income. You may be creating a double tax situation but that is not what the form calls for. Lanny K. Williams, CPA Nawarat, Williams & Co., Ltd. Income Tax Services for Expatriate Americans

Line 44 is your tax based on your taxable income on line 43, subject to adjustments (if any) make on the line 44 worksheet.

Maybe what you fail to understand is that you report both. Line 1a of the 1099-DIV reflects the total dividends you received which includes both qualified AND non-qualified dividends. Line 1b tells you what part of line 1a are qualified dividends and will be subject to a different tax rate. For simplicity--

When you do the line 44 worksheet you subtract the amount of qualified dividends from your taxable income and eventually figure the tax on THAT amount which means that you are only being taxed on the non-qualified dividends or in other words, you have removed the 1099-DIV line 1b amount from your income and figured your tax on what is left), that goes on line 16 of the worksheet. Then you figure ONLY the tax at the qualified dividend rate ONLY on the amount of qualified dividends that you had previously subtracted out and enter those (subject to phase out limitations). Eventually you add the two taxes together and that becomes your total tax. You are not taxed twice for the same dividends. Your are only taxed at different tax rates for different portions of the same dividend. Thus, if you have qualified dividends it can only reduce the amount of your tax, never increase it. The line 44 worksheet is confusing so read it carefully. If you miss a step (or interpret the lines instruction incorrectly) you will end up with a totally incorrect result.

--

-Ernie-

That's correct.

Why on earth does it bother you? 1099-DIV box 1(a) is *all* dividends, and box 1(b) is the portion of the 1(a) dividends that are qualified. What's the problem you have with that?

If you still think you're being double taxed, you need to follow the qualified dividends and cap gain worksheet more carefully.

You'll see that it subtracts out qualified divs and net long-term cap gain from taxable income before asking you to compute the tax on taxable income.

-- Rich Carreiro snipped-for-privacy@animato.arlington.ma.us