VTSAX (Total Stock Market) and Qualified Dividends

[kryptonic]

I could use some help understanding how to determine what portion of dividends will be qualified vs ordinary come 1099-DIV time for Vanguard mutual funds.

My understanding is that qualified dividends are not included in MAGI and I want to better control this in my portfolio.

This is for a Taxable account with no purchases or sales in 2019 other than dividend re-investment

When I look at VBTLX (Vanguard Total Stock Market) as an example:

1) From my 1099-DIV for 2019, about 48% of the dividends are "Qualified / box 1b" and 52% are "Ordinary / box 1a"

2) When I look at the bogleheads.org wiki on this fund (https://www.bogleheads.org/wiki/Vanguar ... tributions) I see that "Qualified dividends" tends to be 90%-100%.

Although the bogleheads wiki does not have 2019 data, it does make me think that there must be something that I am missing since my "Ordinary / box 1a" dividend proportion is so high.

Can someone help me reconcile what I am seeing on my 1099-DIV to something published that I can use to select/understand funds?

Thanks!

[earlyout]

Something is amiss. VBTLX is the Total Bond index fund, not Total Stock. What 1099 Div are you looking at?

[jebmke]

Box 1b is a subset of 1a; So if 1a is say, $100 and 95% of them are qualified, 1b will show $95.

[NancyABQ]

I could use some help understanding how to determine what portion of dividends will be qualified vs ordinary come 1099-DIV time for Vanguard mutual funds.

My understanding is that qualified dividends are not included in MAGI and I want to better control this in my portfolio.

I'm confused because as far as I can tell, MAGI does include "investment income", including qualified dividends?

[jebmke]

I could use some help understanding how to determine what portion of dividends will be qualified vs ordinary come 1099-DIV time for Vanguard mutual funds.

My understanding is that qualified dividends are not included in MAGI and I want to better control this in my portfolio.

I'm confused because as far as I can tell, MAGI does include "investment income", including qualified dividends?

Yes, MAGI normally includes qualified dividends since they are a subset of ordinary dividends. They are simply taxed differently than the amount that is not qualified.

[Munir]

Erroneous title. VBTLX is NOT the Total Stock Market fund. Can it get corrected?

[Hyperchicken]

In 2019, VBTLX had $0.30194 distributed per share, box 1a equals 0.30194, all other boxes are zero on 1099-DIV.

The title is confusing and is contradictory. Assuming OP is looking at VTSAX -

VTSAX had $1.4061 distributed per share,

Box 1a = 1.4061 (ordinary dividends - this is inclusive of box 1b below)
Box 1b = 1.31878 (qualified dividends)
Box 5 = 0.082258 (section 199A dividends)

These numbers will probably not change much in 2020.

Vanguard primary layout spreadsheet is an infinite well of useful information.

Side note - this shows that VTSAX had 94% qualified dividends, whereas VFIAX had 100% qualified dividends in 2019. This makes VFIAX ever so slightly more tax efficient.

[kryptonic]

Thank you all for the responses. Correct, I did mean VTSAX. Not sure how to correct the title.

It sounds like the key thing that I did not understand was that Qualified dividends is a subset of Ordinary dividends.

So... if I had $100 in box 1a and $94 in box 1b I would have 94% Qualified dividends, not ~48%.


Perhaps I misunderstood that qualified dividends are not included in MAGI also... The author of this article perhaps means that once you add in ordinary dividends, no need to also add in qualified dividends... (https://www.fiphysician.com/magi-calcul ... x-credits/)

[Mullins]

I could use some help understanding how to determine what portion of dividends will be qualified vs ordinary come 1099-DIV time for Vanguard mutual funds.

Vanguard serves up that information here for 2020:
https://advisors.vanguard.com/VGApp/iip ... yeartodate

[terran]

Thank you all for the responses. Correct, I did mean VTSAX. Not sure how to correct the title.

It sounds like the key thing that I did not understand was that Qualified dividends is a subset of Ordinary dividends.

So... if I had $100 in box 1a and $94 in box 1b I would have 94% Qualified dividends, not ~48%.


Perhaps I misunderstood that qualified dividends are not included in MAGI also... The author of this article perhaps means that once you add in ordinary dividends, no need to also add in qualified dividends... (https://www.fiphysician.com/magi-calcul ... x-credits/)

Yes, all dividends produced by VTSAX are ordinary and most are qualified. I've seen that article come up before with similar confusion. The author states "Qualified dividends are not included in MAGI calculation! They stack on top of your ordinary income when you are paying the Capital Gain and qualified dividend taxes, but let’s not worry about that right now." which is a pretty clear statement and is also definitely false. Based on this article I wouldn't rely on this author's expertise for technical personal finance issues.

Here's some good information about ACA MAGI straight from the source: https://www.healthcare.gov/glossary/mod ... come-magi/ (be sure to read the information they link to at the bottom of the page too).