Which mutual fund dividends do not qualify for the lower tax rates?
Mutual fund dividends attributable to (i) interest, (ii) dividends on stock issued by certain foreign companies, and (iii) dividends on stock not held by the mutual fund for the requisite holding period will not qualify for long–term capital gain tax rates at which qualified dividends are potentially taxed. All or a portion of mutual fund dividends attributable to short–term capital gains also may not qualify for long–term capital gain tax rates at which qualified dividends are potentially taxed. These dividends will likely comprise a portion of the total ordinary dividends reported in line 1a of Form 1099–DIV. Mutual fund dividends that are reported as qualified dividends on Line 1b of Form 1099–DIV but for which a shareholder does not satisfy the requisite holding period for the dividend–paying mutual fund (see previous question) also will not qualify for the lower long–term capital gains tax rates. See Qualified Dividends for more information.
Mutual fund dividends attributable to (i) interest, (ii) dividends on stock issued by certain foreign companies, and (iii) dividends on stock not held by the mutual fund for the requisite holding period will not qualify for long–term capital gain tax rates at which qualified dividends are potentially taxed. All or a portion of mutual fund dividends attributable to short–term capital gains also may not qualify for long–term capital gain tax rates at which qualified dividends are potentially taxed. The dividends just described will likely comprise a portion of the total ordinary dividends reported in column 1a of Form 1099–DIV. Mutual fund dividends that are reported as qualified dividends in column 1b on Form 1099–DIV, but for which a shareholder does not satisfy the requisite holding period for the dividend–paying mutual fund (see previous question), also will not qualify for the lower long–term capital gains tax rates. See Qualified Dividends for more information.
