Ordinary and Qualified Dividends?

Both are taxed, but qualified dividends are taxed at your capital gains tax rate rather than your regular income rate. Google is your friend:

Barry Margolin wrote in news:barmar- snipped-for-privacy@newsgroups.comcast.net:

Which shows that English, even though a grammatically and structurally simple language, has fallen victim to "interpretation" by lawyers and legislators. The above reference is a very good example. Apparently, the operative wording for "qualified" dividends is:

the investor "must have held the stock for more than 60 days during the

121-day period that begins 60 days before the ex-dividend date," as the IRS explains in Publication 550. (sorry see above link fr the html link to the IRS publication)

Now, the difference between long and short gains is less clear to me in view of this sentence, but I am a biochemist, not a linguist, or tax expert.

Barry Margolin wrote in news:barmar- snipped-for-privacy@newsgroups.comcast.net:

Which shows that English, even though a grammatically and struccturally simple language, has fallen victim to "interpretation" by lawyers and legislators.

Qualified dividends are taxed at a lower rate. Form 1099-DIV line 1a is the total ordinary dividends, and line 1b shows which of those dollars were "qualified".

Qualified dividends and capital gains have nothing to do with each other, aside from long-term capital gains being taxed in the rate structure as qualified dividends. That definition of qualified dividends has no effect on the definition of long-term gains, which continues to be "gain on the sale of a capital asset with a holding period of more than a year".

-- Rich Carreiro snipped-for-privacy@rlcarr.com

I am not sure if this was explained already, but how do you determine what dollar amount is qualified to be taxed at a lower tax rate? (unrelated to previous question) Long term and short term I assume long term is more than a yr. and short term is less than a yr. when talking about dividends, is this correct?

Thanks for the response and help, thanks to all!

========================================= MODERATOR'S COMMENT: Please delete all unnecessary material from the prior message when responding.

Which part did you not understand?

No. Read more.

Did you not read the last sentence just before this question?

"and line 1b shows which of those dollars were "qualified"."

Rich Carreiro wrote in news: snipped-for-privacy@swing-shift.time-tripper.com:

Thanks, Rich, for the correction. I hope I didn't lead anyone astray.

Long and short term are used when talking about capital gains, not dividends. But you're correct that the dividing point is 1 year.

What I want to know is why the crazy worksheet on page 35 of the 1040 instructions is so difficult to comprehend. Isn''t there an easier way to explain what it is doing? Thanks.

All of your income, including capital gain and qualified dividends are included in your adjusted gross income (AGI). Your taxable income comes from your AGI after adjusting for deductions and exemptions. However, if your taxable income contains capital gains or qualified dividends, then they may not be taxed at the same rate as the rest of your income. The rate that they are taxed at depends on the amount of taxable income and your filing status. The worksheets are designed to separate out the capital gains and qualified dividends and apply the correct tax rate to them. It is messy because it has to work for every circumstances (different income levels, different filing status, etc).