1099-DIV does not equal income dividends?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
juliewongferra
Posts: 201
Joined: Fri Oct 09, 2009 10:53 am

1099-DIV does not equal income dividends?

Post by juliewongferra » Mon Feb 12, 2018 10:55 am

Dear Bogleheads,

I was looking at my 1099-DIV, ready to do my taxes, and noticed that neither the total ordinary dividends or the qualified dividends for my FTSE All World ex-US equal the total income dividends from 2017, as reported on my quarterly statements. (I did not sell any shares in 2017, not that it would make a difference!)

In contrast, the total ordinary dividends of my Total Stock Market investment matches the total on my quarterly statements exactly.

Is there something I'm missing with this foreign investment? Like, is there unreported, but legitimate, foreign tax paid or something else I should consider?

cheers,
jwf

User avatar
Epsilon Delta
Posts: 7037
Joined: Thu Apr 28, 2011 7:00 pm

Re: 1099-DIV does not equal income dividends?

Post by Epsilon Delta » Mon Feb 12, 2018 11:02 am

Short term capital gains distributions are included as "ordinary dividends" on a 1099.

You also need to look at any foreign tax payed. Any foreign tax paid in box 6 needs to be added to distributed dividends to arrive at box 1.

User avatar
House Blend
Posts: 4315
Joined: Fri May 04, 2007 1:02 pm

Re: 1099-DIV does not equal income dividends?

Post by House Blend » Mon Feb 12, 2018 12:43 pm

To elaborate on EDs response, yes, if you hold international stocks in taxable, then your taxable dividends will be larger than the amounts distributed to you.

The fund withheld amounts to pay foreign taxes from your dividend. So for example, if your brokerage paid you $1000 in dividends from VFWAX in 2017, your 1099 might show $1070 in Box 1, and $70 in Box 6 (foreign taxes paid).

The bad news is that you have to pay US tax on $1070, not $1000.

The good news is that in many cases (and all cases involving less than $300/$600 in foreign tax (Single/MFJ)), you get a tax credit for the full amount of foreign taxes paid. So in effect, you do get the $70 after all, and you just have to pay US tax on it as you would expect.

jebmke
Posts: 7385
Joined: Thu Apr 05, 2007 2:44 pm

Re: 1099-DIV does not equal income dividends?

Post by jebmke » Mon Feb 12, 2018 12:47 pm

House Blend wrote:
Mon Feb 12, 2018 12:43 pm
and all cases involving less than $300/$600 in foreign tax (Single/MFJ)
Except to the extent that there is no tax liability. FTC is a non-refundable credit.
When you discover that you are riding a dead horse, the best strategy is to dismount.

livesoft
Posts: 59229
Joined: Thu Mar 01, 2007 8:00 pm

Re: 1099-DIV does not equal income dividends?

Post by livesoft » Mon Feb 12, 2018 12:49 pm

Foreign taxes were taken from your dividends and not put into your account. That's why the numbers are different.

If you add the foreign taxes to the numbers paid to you, do they add up to the amount of dividends on the 1099-DIV?
This signature message sponsored by sscritic: Learn to fish.

juliewongferra
Posts: 201
Joined: Fri Oct 09, 2009 10:53 am

Re: 1099-DIV does not equal income dividends?

Post by juliewongferra » Tue Feb 13, 2018 1:06 pm

Dear Epsilon Delta, House Blend, jebmke, and livesoft

Thank you all soo much for helping me puzzle this out. True, 1099-DIV Box + Dividends on statements 6 = Box 1a!
The mystery is solved. I'm sorry I couldn't figure it out myself.

(I did get a little confused because the Foreign Income amount on the Foreign Tax Paid document is yet another amount that does not math well with these other numbers, but with you all reassuring me that things should add up (and they do), I am relieved!

cheers,
jwf

User avatar
Duckie
Posts: 5382
Joined: Thu Mar 08, 2007 2:55 pm

Re: 1099-DIV does not equal income dividends?

Post by Duckie » Tue Feb 13, 2018 7:57 pm

juliewongferra wrote:I did get a little confused because the Foreign Income amount on the Foreign Tax Paid document is yet another amount that does not math well with these other numbers,
The Foreign Income amount on the Foreign Tax Paid form only matters if you are filing Form 1116.

Longtermgrowth
Posts: 491
Joined: Thu Nov 26, 2015 1:59 pm

Re: 1099-DIV does not equal income dividends?

Post by Longtermgrowth » Wed Feb 14, 2018 5:57 am

jebmke wrote:
Mon Feb 12, 2018 12:47 pm
House Blend wrote:
Mon Feb 12, 2018 12:43 pm
and all cases involving less than $300/$600 in foreign tax (Single/MFJ)
Except to the extent that there is no tax liability. FTC is a non-refundable credit.
Is there not also a possible situation, where portfolio income is the main source, and foreign income amounts to a certain percentage of total income that negates the available FTC to claim for the year?

User avatar
grabiner
Advisory Board
Posts: 21587
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: 1099-DIV does not equal income dividends?

Post by grabiner » Wed Feb 14, 2018 10:36 pm

Longtermgrowth wrote:
Wed Feb 14, 2018 5:57 am
jebmke wrote:
Mon Feb 12, 2018 12:47 pm
House Blend wrote:
Mon Feb 12, 2018 12:43 pm
and all cases involving less than $300/$600 in foreign tax (Single/MFJ)
Except to the extent that there is no tax liability. FTC is a non-refundable credit.
Is there not also a possible situation, where portfolio income is the main source, and foreign income amounts to a certain percentage of total income that negates the available FTC to claim for the year?
It's not likely with mutual funds. For most mutual funds, about 7% of the dividend is withheld as foreign tax, and most taxpayers with taxable accounts pay more than 7% of their taxable income in tax. (Note that taxable income is what is relevant here; most deductions are treated as applying equally to US and foreign income, and those which aren't are usually applied only to US income, which is even more favorable.)

If you have foreign qualified dividends of $20K or more, or are in a high tax bracket, you may have to prorate the foreign income which is earned on qualified dividends because they are taxed at a lower rate. But if you are in a high tax bracket, the proration still isn't likely to interfere with the foreign tax credit, so the limit will only affect taxpayers who have $20K of foreign qualified dividends and relatively little other income.
David Grabiner

Post Reply