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Post by bobfl on Feb 15, 2023 14:19:23 GMT
I'll be the first.
I invest in preferreds and know how the dividends are taxed.
My entire preferred portfolio is built on a tax strategy.
Question:
How are the dividends taxed on regular stocks?
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Post by fishingrod on Feb 15, 2023 14:28:06 GMT
How are regular stocks taxed?
Big subject. www.irs.gov/taxtopics/tc404"Dividends are the most common type of distribution from a corporation. They're paid out of the earnings and profits of the corporation. Dividends can be classified either as ordinary or qualified. Whereas ordinary dividends are taxable as ordinary income, qualified dividends that meet certain requirements are taxed at lower capital gain rates. The payer of the dividend is required to correctly identify each type and amount of dividend for you when reporting them on your Form 1099-DIV for tax purposes. For a definition of qualified dividends, refer to Publication 550, Investment Income and Expenses."
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Post by bobfl on Feb 15, 2023 15:31:41 GMT
How are regular stocks taxed?
Big subject. www.irs.gov/taxtopics/tc404"Dividends are the most common type of distribution from a corporation. They're paid out of the earnings and profits of the corporation. Dividends can be classified either as ordinary or qualified. Whereas ordinary dividends are taxable as ordinary income, qualified dividends that meet certain requirements are taxed at lower capital gain rates. The payer of the dividend is required to correctly identify each type and amount of dividend for you when reporting them on your Form 1099-DIV for tax purposes. For a definition of qualified dividends, refer to Publication 550, Investment Income and Expenses."
Thanks! I chose the preferreds I hold because they are all qualified. Just my preference after trading preferreds for over 20 years because I find that they perform slightly different plus give a nice tax break. If preferreds stay up and ordinary stocks drop in price and create a favorable spread, I might switch to ordinary stocks and ride that back up. So you are saying that ordinary stocks could either be qualified or not qualified. Where do you confirm which it is? It is very easy to find and search for the tax method for preferreds. If ordinary stocks can vary then buying dividend payers in a basket (ETF or fund) might become complicated. |
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Post by fishingrod on Feb 15, 2023 16:14:41 GMT
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Post by bobfl on Feb 15, 2023 16:21:23 GMT
fishingrod,
Thank you!
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Post by Capital on Feb 15, 2023 23:16:38 GMT
If you have REITS some of that income will qualify for the 199a deduction. |
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Post by FD1000 on Feb 27, 2023 4:46:25 GMT
Several generic observations about preferred.
1) Many investors have most of their money in deferred accounts. Good savers/investors use their 401k, 403B and Roth IRA while they work. Taxes are not that important.
2) The most common stock indexes have much lower dist than preferred. VTI=1.6%...QQQ=0.7%...PFF=5.5%. A typical investor should not worry about VTI+QQQ dist. because Long-term capital gains taxes are a tax on profits from the sale of an asset held for more than a year. The long-term capital gains tax rate is 0%, 15% or 20%, depending on your taxable income
3) Why the best experts don't promote preferred over stocks. How could it be that all these smart investors missed it?
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