Why does my fidelity statement have Qualified and ordinary amounts for dividends?

Forum|Forum|1 year ago
February 10, 2025
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Why does Fidelity show both Qualified and Ordinary dividends in the 1099?

Best answer by VolvoGirl

Yes Turbo Tax is calculating the tax on it right. Did you read my post above?

Even though the full dividend amount from box 1a shows up in the total income on the 1040 line 3b , if you have qualified dividends in box 1b on line 3a, the tax is not taken from the tax table but is calculated separately from Schedule D. The tax will be calculated on the Qualified Dividends and Capital Gain Tax Worksheet. It does not get filed with your return. In the online version you need to save your return as a pdf file and include all the worksheets to see it.

For the Desktop version you can switch to Forms Mode and open the worksheet to see it. Click Forms in the upper right (upper left for Mac) and look through the list and open the Qualified Dividends and Capital Gain Tax Worksheet.

IRS Qualified Dividends and Capital Gain Tax Worksheet—Line 16 on 1040 instructions page 37
https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

And you will need to use this IRS worksheet on page 15.
https://www.irs.gov/pub/irs-pdf/i1040tt.pdf

fanfare

Employee

Dividends come in two flavors,

Your account is giving you some of each.

If the amounts are equal, all your dividends are qualified dividends.

@jcbrenner2

jcbrenner2Author

Yes they are equal amounts so then the software should treat it as Qualified and tax at the capital gains rate, however it is treating it as ordinary and adding it to my income for federal tax. Both amounts in 1a and 1b are the same. It goes in the premium software that way but does not calculate correctly at the end.

VolvoGirlAnswer

Employee

Yes Turbo Tax is calculating the tax on it right. Did you read my post above?

IRS Qualified Dividends and Capital Gain Tax Worksheet—Line 16 on 1040 instructions page 37
https://www.irs.gov/pub/irs-pdf/i1040gi.pdf

And you will need to use this IRS worksheet on page 15.
https://www.irs.gov/pub/irs-pdf/i1040tt.pdf

JohnB5677

Qualified and Ordinary are taxed at different rates.

Qualified dividends are taxed similar to capital gains which are typically a lower rate.

Ordinary dividends are taxed as if they were regular income.

Fidelity is simply allocating the dividends to the appropriate tax account.

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VolvoGirl

Employee

Qualified Dividends in box 1b is only the portion (or all) of the amount in box 1a that may be eligible for capital gains rates. It is included in box 1a. So it is taxed at a lower rate.

Even though it shows up as income on the first page,if you have capital gains or qualified dividends the tax is not taken from the tax table but is calculated separately from schedule D. The tax will be calculated on the Qualified Dividends and Capital Gain Tax Worksheet. It does not get filed with your return.