When do dividends qualify for lower rates?

March 8, 2004

Subject:  qualifying dividend beginning date

From:  Carol
Date:  Sat, 07 Feb 2004

An AARP bulletin said that dividends before May 31 were not qualified dividends (eligible for long-term capital gains rates). Your articles say the new law was retroactive to January 1, 2003. Who is right?

Carol from Fremont

Answer

Date:  Mon, 01 Mar 2004

Hello Carol,

Qualified dividends are eligible for the lower tax rates, retroactively to January 1, 2003. It could be the AARP article was referring to long-term capital gains dividends. Those dividends aren't eligible for the lower long-term capital gains tax rates until after May 31. These details are disclosed on Form 1099DIV.

Good luck!
Mike Gray

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