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Taxes From A To Z (2014): X Is For XD
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Taxes From A To Z (2014): X Is For XD

Apr 9 2014, 9:54pm CDT | by

X is for XD. XD is a qualifier or symbol to indicate that a stock is trading ex-dividend. A stock is considered to be trading ex-dividend on or after the ex-dividend date. The ex-dividend date is...

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16 weeks ago

Taxes From A To Z (2014): X Is For XD

Apr 9 2014, 9:54pm CDT | by

X is for XD.

XD is a qualifier or symbol to indicate that a stock is trading ex-dividend. A stock is considered to be trading ex-dividend on or after the ex-dividend date. The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment: the seller will get the dividend. In other words, you must own a stock before the ex-dividend date to receive its next dividend.

When it comes to federal income taxes, the ex-dividend date matters for purposes of determining whether you have qualified dividends.

Qualified dividends are ordinary dividends which meet certain criteria that allows them to be taxed at the more preferable long-term capital gains tax rate.

To qualify for the maximum rate, the dividends must:

  • Be paid by a U.S. corporation or a qualified foreign corporation;
  • Not be: capital gain distributions; dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U.S. building and loan associations, U.S. savings and loan associations, federal savings and loan associations, and similar financial institutions; dividends from a corporation that is a tax-exempt organization or farmer’s cooperative during the corporation’s tax year in which the dividends were paid or during the corporation’s previous tax year; dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan maintained by that corporation; dividends on any share of stock to the extent you are obligated to make related payments for positions in substantially similar or related property; payments in lieu of dividends if you know or have reason to know the payments are not qualified dividends; or payments shown on federal form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends; and
  • Meet the appropriate holding period.

The holding period is key – and that’s where the ex-dividend matters. To qualify, you must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. When counting the number of days you held the stock, include the day you sold the stock, but not the day you acquired it.

The rules are a little different for preferred stock. If the preferred dividends are due to periods totaling less than 367 days, the holding period is the same as above. If however, the dividends are due to periods totaling more than 366 days, the holding period changes to more than 90 days during the 181-day period that begins 90 days before the ex-dividend date.

Fortunately, the determination whether dividends are qualified dividends is made for many taxpayers and is reported at box 1b of the Form 1099-DIV:

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If, however, it’s necessary to make a determination about whether dividends are actually qualified dividends, you’ll want to work with your investment and financial advisors as well as your tax professional to figure the holding period and the ex-dividend date.

For more in the series, see:

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Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken int ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejec ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hish ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the so ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 mil ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mustapa Mohamed ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

8 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an alloca ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

8 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 2014. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

8 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway (Kidex) to ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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