ordinary vs qualified divs from total stock market

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sambb
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Joined: Sun Mar 10, 2013 3:31 pm

ordinary vs qualified divs from total stock market

Post by sambb »

why are dividends in both buckets from vanguard total stock.
sixty40
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Joined: Sat Dec 06, 2014 11:53 am

Re: ordinary vs qualified divs from total stock market

Post by sixty40 »

If you are asking why does the 1099-div have both dividends in box-1 and qualified dividends in box-2. Box1 is total dividends, box2 indicates how much in box1 is qualified. Box2 can be smaller or equal to box1. Box 2 is taxed at long term capital gains rate, the remainder of box1 less box2 is taxed at normal income tax rates.
krow36
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Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: ordinary vs qualified divs from total stock market

Post by krow36 »

Ordinary dividends are made up of qualified dividends and non-qualified dividends. For instance Vanguard's Balanced Index fund will produce (mostly?) qualified dividends from the equity component, and non-qualified dividends from the fixed income component. As mentioned, qualified dividends are taxed at lower capital gain rates, and non-qualified dividends are taxed at regular income tax rates.
Alan S.
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Location: Prescott, AZ

Re: ordinary vs qualified divs from total stock market

Post by Alan S. »

Also, note that some amounts shown in Box 1, but not Box 2 are not really dividends. They are short term cap gain distributions which must be reported as NQ dividends on the 1099 DIV. And you cannot offset them with your cap losses.
livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: ordinary vs qualified divs from total stock market

Post by livesoft »

It may be helpful to call them
ordinary non-qualified dividends and
ordinary qualified dividends

The "ordinary" part helps distinguishes them from tax-exempt interest dividends.

Or if you like,
non-qualified ordinary dividends
qualified ordinary dividends.

With the above terms, one can understand why Box 1 is all ordinary dividends (qualified and non-qualified) and Box 2 is just the qualified ordinary dividends.
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