Tax planning/dividend question

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Topic Author
Streptococcus
Posts: 427
Joined: Wed Jan 02, 2013 11:17 pm

Tax planning/dividend question

Post by Streptococcus »

Hello,
I’ve been using the IRS 2024 tax withholding estimator and the result is confusing.

The total pre-tax income I get includes our salaries + our bonuses + OUR ORDINARY DIVIDENDS + OUR QUALIFIED DIVIDENDS. Summing ordinary dividends and qualified dividends results in a higher pre-tax income than the money expected to come in. Aren’t qualified dividends included in ordinary dividends?

Am I missing something?
Thanks in advance for you inputs.
livesoft
Posts: 86736
Joined: Thu Mar 01, 2007 7:00 pm

Re: Tax planning/dividend question

Post by livesoft »

got a link so I can read the tool's instructions?

Ordinary dividends should include both non-qualified ordinary dividends and qualified ordinary dividends, but different tools might explicitly want those 2 kinds of ordinary dividends entered separately.
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Topic Author
Streptococcus
Posts: 427
Joined: Wed Jan 02, 2013 11:17 pm

Re: Tax planning/dividend question

Post by Streptococcus »

https://www.irs.gov/individuals/tax-wit ... -estimator

The instructions seem pretty clear including the part involving ordinary dividends (box 1a on 1099-DIV) and qualified dividends (box 1b). But the total income adds both whereas my total income will only include ordinary dividends.
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FiveK
Posts: 16228
Joined: Sun Mar 16, 2014 2:43 pm

Re: Tax planning/dividend question

Post by FiveK »

Streptococcus wrote: Mon Jun 10, 2024 3:55 pm https://www.irs.gov/individuals/tax-wit ... -estimator

The instructions seem pretty clear including the part involving ordinary dividends (box 1a on 1099-DIV) and qualified dividends (box 1b). But the total income adds both whereas my total income will only include ordinary dividends.
Agreed - those instructions lead to an incorrect answer. You could
a) include only the "ordinary minus qualified" dividend amount where it asks for the ordinary amount, or
b) use a different estimator, such as any of the Tax estimation tools that cover your situation.
ehh
Posts: 828
Joined: Mon Feb 01, 2021 10:04 am

Re: Tax planning/dividend question

Post by ehh »

Streptococcus wrote: Mon Jun 10, 2024 3:45 pm Aren’t qualified dividends included in ordinary dividends?
On a 1099-div and on a form 1040, yes.

But not, apparently, in this tool. It allows me to input ordinary dividends of 0 and qualified dividends of 115,000.
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