Yet another qualified dividend question

[Investing Newbie]

Hi everyone,

The concept of a qualified dividend is now becoming clear to me when it comes to looking at each quarterly distribution in isolation. If held for 61 days of the 121 day holding period then it counts as qualified.

The 1099-DIV form lists ordinary and qualified dividends for the entire year. How is this relevant? Doesn't one need to look at the dividends at each distribution and determine their personal qualified dividend amount based on the holding period, and then add up qualified dividends at the end of the year? If I buy shares monthly I think I'd need to pay attention to how many of my dividends are qualified for each distribution in order to accurately keep track. I don't see how a year end total can be used for dividends throughout the year without knowing the details of owned shares at the particular time of the distribution.

I'm sure I must be missing something obvious here because I have not seen anything of this sort mentioned. Most of the threads I've read deal with what counts as qualified and whether or not the 1099-DIV keeps track of your personal situation, which I now know it does not.

Thank you.

[KlangFool]

OP,

It has absolutely nothing to do with when you buy. So, in your case, you do not have to do anything to adjust the number in the 1099-DIV. You only have to adjust if you sell the mutual fund/ETF after the ex-dividend date.

For example, if you buy the mutual fund/ETF right before the ex-dividend date and did not sell, you would have met the 61 days holding period requirement.

KlangFool

[Investing Newbie]

So the holding period isn’t unique to a particular distribution? If my 61 day period is met in order to be qualified for a March distribution then it’s automatically qualified for the other quarterly distributions as well? Based on my confusion from my initial post I thought each distribution has a unique holding period in order to be qualified.

[KlangFool]

So the holding period isn’t unique to a particular distribution? If my 61 day period is met in order to be qualified for a March distribution then it’s automatically qualified for the other quarterly distributions as well? Based on my confusion from my initial post I thought each distribution has a unique holding period in order to be qualified.

Investing Newbie,

<<Based on my confusion from my initial post I thought each distribution has a unique holding period in order to be qualified.>>

Yes, that is true. But, if you never sell, how could you not meet the 61 days holding period requirement?

KlangFool

[Investing Newbie]

Touché

[KlangFool]

Touché

Don't worry about this. I was very confused about this item too.

An expert is someone that made the mistake and learned from the mistake before you do. We all been there.

KlangFool

[Investing Newbie]

So I'd like to walk through the numbers to make sure I'm doing this correctly.

Date purchased Number of shares

11/19/18 44.78
12/10/18 22.814
12/27/18 40.98
1/31/19 29.66

Ex dividend date 12/21/19
121 day window 10/22/18 - 2/19/19

Dividend .346 , 94.01% qualified (VTSAX)

Only the shares purchased on 11/19/18 and 12/10/18 are qualified since the others were purchased after the ex dividend date.

So, 67.594 shares x 0.346 x 0.9401 should equal the qualified dividends, correct?

[gmaynardkrebs]

Is the 1099-DIV from Vanguard not reliable in this regard?

[KlangFool]

So I'd like to walk through the numbers to make sure I'm doing this correctly.

Date purchased Number of shares

11/19/18 44.78
12/10/18 22.814
12/27/18 40.98
1/31/19 29.66

Ex dividend date 12/21/19
121 day window 10/22/18 - 2/19/19

Dividend .346 , 94.01% qualified (VTSAX)

Only the shares purchased on 11/19/18 and 12/10/18 are qualified since the others were purchased after the ex dividend date.

So, 67.594 shares x 0.346 x 0.9401 should equal the qualified dividends, correct?

Investing Newbie,
<< since the others were purchased after the ex dividend date.>>

Then, you did not receive any dividend from those lots. So, where is the problem? How could those lots cause any dividend to be non-qualified?

KlangFool

[Investing Newbie]

They can’t. I just like to make sure I understand how the math works.

[gmaynardkrebs]

They can’t. I just like to make sure I understand how the math works.

Do you have any reason to think your 1099 DIV is incorrect?

[KlangFool]

They can’t. I just like to make sure I understand how the math works.

If you are only counting the 2 lots that purchased before ex-dividend, then, the calculation is correct.

KlangFool

[Investing Newbie]

They can’t. I just like to make sure I understand how the math works.

Do you have any reason to think your 1099 DIV is incorrect?

There has been some debate about whether or not the 1099 div accounts for ones personal holding period or not. I don’t believe that it does so I was just trying to work through the math to make sure I understand the calculations.

[KlangFool]

They can’t. I just like to make sure I understand how the math works.

Do you have any reason to think your 1099 DIV is incorrect?

There has been some debate about whether or not the 1099 div accounts for ones personal holding period or not. I don’t believe that it does so I was just trying to work through the math to make sure I understand the calculations.

As per your example, if you sell those 11/19/18 and 12/10/2018 lots on 1/1/2019, then, your 1099-DIV number for qualified dividend would be wrong. Those 2 lots had less than 61 days.

KlangFool

[GuyInFL]

There has been some debate about whether or not the 1099 div accounts for ones personal holding period or not. I don’t believe that it does so I was just trying to work through the math to make sure I understand the calculations.

"Qualified dividends on your tax reporting statement

Qualified dividends are reported on Form 1099-DIV in line 1b or column 1b. However, not all dividends reported on those lines may have met the holding period requirement."

https://www.fidelity.com/tax-informatio ... -dividends