Am I interpreting Vanguard's qualified dividend report correctly?

[Aguilar]

I'd like to estimate the amount of qualified and ordinary dividends I'll receive in 2024. Trying to assess if I'll likely be in a higher IRMAA tier for my Medicare premium when the dust settles.

I already tallied up all dividends paid YTD and estimated the rest based on last year's end of year dividend payouts.

Next step is assessing percentage of dividends that will be qualified. I found this qualified div report from Vanguard: https://advisors.vanguard.com/tax-cente ... end-income

Is it saying that in 2023, for VTSAX 94.68% of dividends issued were qualified? And they estimate 93.06% will be qualified in 2024? Just checking cause I only hold Vanguard funds in my brokerage and my 2023 tax calcs resulted in a much different percentage qualified vs ordinary: $20,799 qualified vs $24,386 ordinary.

[Hyperchicken]

$20,799 qualified vs $24,386 ordinary.

85% does not sound right. How did you calculate that?

[rkhusky]

Vanguard will be posting dividend estimates in mid-December, including qualified dividend percentages.

[retired@50]

Are you holding any cash in your settlement fund?

That will lead to non-qualified dividends.

Regards,

[sycamore]

$20,799 qualified vs $24,386 ordinary.

85% does not sound right. How did you calculate that?

I agree it does not sound right.

Aguilar, did the $24,386 amount come from the main page of the 1099-DIV ? That's a "total" amount from all dividends in your account.
Did you have any investments besides VTSAX in the taxable account that paid dividends?

If your only holding that paid dividends was VTSAX, the qualified amount should be 94.68% * 24,386 = 23,088.66.

[Chip Munk]

Look at the 1099 Vanguard provided to you for 2023. The section titled "Detail for Dividends and Distributions" includes individual line items for every dividend payment for every holding in your Vanguard taxable account, broken out as Qualified, Nonqualified, etc. and in the case of VTI there are also Section 199A dividends which are non-qualified and comprise just over 5% of the distributions in 2023.

The information in that section of your 1099 will show you which investments are responsible for the bulk of your non-qualified dividends since VTI's dividends were 94.68% qualified in 2023.

[prd1982]

Does the IRMAA tier differentiate on the dividend type? I didn't think it mattered.

[Aguilar]

85% does not sound right. How did you calculate that?

I agree it does not sound right.

Aguilar, did the $24,386 amount come from the main page of the 1099-DIV ? That's a "total" amount from all dividends in your account.
Did you have any investments besides VTSAX in the taxable account that paid dividends?

If your only holding that paid dividends was VTSAX, the qualified amount should be 94.68% * 24,386 = 23,088.66.

I wonder if I made a mistake last year and maybe in prior years. I'm gonna have to do some digging into my files for 2022, 2021...

For 2023, I held my brokerage at eTrade for most of the year and then moved it to Vanguard. As a result, I received a 1099 from eTrade, another from Morgan Stanley (bc they acquired eTrade), and another from Vanguard. I held multiple funds: VTSAX, VTIAX, VFWAX, VMLUX and VNYUX. The last two are muni funds.

1099 from eTrade main page says: $10,523 total ordinary div / $9,133 qualified div
1099 from MS: $1,140 total ordinary div / $709 qualified
1099 from Vanguard: $12,723 total ordinary div / $10,957 qualified

Total ordinary: $24,386
Total qualified: $20,799

These are the #s I inputted in my 1040 boxes 3b and 3a. I also had a fair amount of tax exempt interest in box 2a bc of my munis.

Let me know if I screwed up. If I did, I might have made the same mistake in prior years, unfortunately. Or maybe my #s just seemed off to you all bc you thought I only held VTSAX?

[Aguilar]

Does the IRMAA tier differentiate on the dividend type? I didn't think it mattered.

It doesn't but dividend type impacts AGI. SSA determines IRMAA tiers based on boxes 11 and 2a in your 1040.

[Chip Munk]

Does the IRMAA tier differentiate on the dividend type? I didn't think it mattered.

It doesn't but dividend type impacts AGI. SSA determines IRMAA tiers based on boxes 11 and 2a in your 1040.

AGI includes your Ordinary Dividends from line 3b which includes both qualified and non-qualified. So as prd1982 stated, it doesn't matter what percentage of your dividends were qualified if you are just trying to determine if you will cross an IRMAA tier.

Qualified vs non-qualified matters if you are trying to estimate the taxes you will owe.

ETA: If you own any international funds, you probably paid foreign tax. There is no mention of the foreign tax you paid in your Vanguard account but it is included in the Ordinary Dividends on your 1099. In other words, if you hold international funds your Ordinary Dividends for the year will likely be higher than the sum of the dividends paid into your account.

[Aguilar]

It doesn't but dividend type impacts AGI. SSA determines IRMAA tiers based on boxes 11 and 2a in your 1040.

AGI includes your Ordinary Dividends from line 3b which includes both qualified and non-qualified. So as prd1982 stated, it doesn't matter what percentage of your dividends were qualified if you are just trying to determine if you will cross an IRMAA tier.

Qualified vs non-qualified matters if you are trying to estimate the taxes you will owe.

ETA: If you own any international funds, you probably paid foreign tax. There is no mention of the foreign tax you paid in your Vanguard account but it is included in the Ordinary Dividends on your 1099. In other words, if you hold international funds your Ordinary Dividends for the year will likely be higher than the sum of the dividends paid into your account.

Oh right. My mistake. I forgot that ordinary div equals qualified + non qualified.

I had $349 in foreign taxes paid across the 3 1099s last year. I filed a $349 foreign tax credit. Did you see my post above with the 2023 breakdown? Curious if I made a mistake there using the totals from the main page of each 1099.

As for estimating my Medicare AGI, am I correct that my tax exempt dividends from muni funds are included in 1040 3b and 2a? If yes, then is SSA counting those dividends twice when assessing my AGI for Medicare IRMAA purposes? That doesn’t make sense.

[Chip Munk]

Oh right. My mistake. I forgot that ordinary div equals qualified + non qualified.

I had $349 in foreign taxes paid across the 3 1099s last year. I filed a $349 foreign tax credit. Did you see my post above with the 2023 breakdown? Curious if I made a mistake there using the totals from the main page of each 1099.

As for estimating my Medicare AGI, am I correct that my tax exempt dividends from muni funds are included in 1040 3b and 2a? If yes, then is SSA counting those dividends twice when assessing my AGI for Medicare IRMAA purposes?

Your 1099 will correctly include the amount of foreign tax paid as part of your ordinary dividends.

Your tax-exempt interest is reported on line 2a of your tax return. It is not included in your ordinary dividends on line 3b and it is not included in your AGI. To determine whether you owe IRMAA, the SSA adds your tax-exempt interest (line 2a) to your AGI (line 11).

[sycamore]

...
I wonder if I made a mistake last year and maybe in prior years. I'm gonna have to do some digging into my files for 2022, 2021...

For 2023, I held my brokerage at eTrade for most of the year and then moved it to Vanguard. As a result, I received a 1099 from eTrade, another from Morgan Stanley (bc they acquired eTrade), and another from Vanguard. I held multiple funds: VTSAX, VTIAX, VFWAX, VMLUX and VNYUX. The last two are muni funds.

1099 from eTrade main page says: $10,523 total ordinary div / $9,133 qualified div
1099 from MS: $1,140 total ordinary div / $709 qualified
1099 from Vanguard: $12,723 total ordinary div / $10,957 qualified

Total ordinary: $24,386
Total qualified: $20,799

These are the #s I inputted in my 1040 boxes 3b and 3a. I also had a fair amount of tax exempt interest in box 2a bc of my munis.

Let me know if I screwed up. If I did, I might have made the same mistake in prior years, unfortunately. Or maybe my #s just seemed off to you all bc you thought I only held VTSAX?

I added the numbers and got the same totals as you

Yes, the confusion was around thinking you only held VTSAX

[Aguilar]

Oh right. My mistake. I forgot that ordinary div equals qualified + non qualified.

I had $349 in foreign taxes paid across the 3 1099s last year. I filed a $349 foreign tax credit. Did you see my post above with the 2023 breakdown? Curious if I made a mistake there using the totals from the main page of each 1099.

As for estimating my Medicare AGI, am I correct that my tax exempt dividends from muni funds are included in 1040 3b and 2a? If yes, then is SSA counting those dividends twice when assessing my AGI for Medicare IRMAA purposes?

Your 1099 will correctly include the amount of foreign tax paid as part of your ordinary dividends.

Your tax-exempt interest is reported on line 2a of your tax return. It is not included in your ordinary dividends on line 3b and it is not included in your AGI. To determine whether you owe IRMAA, the SSA adds your tax-exempt interest (line 2a) to your AGI (line 11).

Thanks for clarifying. I ran the math and my IRMAA tier is gonna depend on my end of year dividends. Depending on what I’m paid out, if I max my TIRA I might get under $129k Medicare AGI. I guess I’ll wait and see.

[Eagle33]

Unless you used SSA-44 to lower your 2024 IRMAA payments, your 2024 MAGI IRMAA will just be used for 2026 IRMAA. See https://thefinancebuff.com/medicare-irmaa-income-brackets.html
Higher than the 2024 IRMAA levels using your 2022 income.

[Aguilar]

Unless you used SSA-44 to lower your 2024 IRMAA payments, your 2024 MAGI IRMAA will just be used for 2026 IRMAA. See https://thefinancebuff.com/medicare-irmaa-income-brackets.html
Higher than the 2024 IRMAA levels using your 2022 income.

Right. I already submitted SSA-44 and was approved so SSA is using my 2024 income for my 2024 IRMAA calc. They’ll be using my 2025 income for my 2025 IRMAA calc as well. I was able to do this bc my job loss at end 2023 was classified as a life changing event. Affected my income significantly.