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Dividends are taxable when they are constructively received.
Income is constructively received when an amount is credited to your account or made available to you without restriction. You need not have possession of it. If you authorize someone to be your agent and receive income for you, you are considered to have received it when your agent receives it. Income is not constructively received if your control of its receipt is subject to substantial restrictions or limitations.
So you may have dividends reinvested - that will not make any difference.Only dividends credited within a tax deferred account (such as IRA or retirement plan) are not taxable unless distributed.
Dividends credited to a regular account are taxable.
Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. They should be shown in box 1b of the Form 1099-DIV you receive.The maximum rate of tax on qualified dividends is:•0% on any amount that otherwise would be taxed at a 10% or 15% rate.•15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39.6%.•20% on any amount that otherwise would be taxed at a 39.6% rate.
To qualify for the maximum rate, all of the following requirements must be met.•The dividends must have been paid by a U.S. corporation or a qualified foreign corporation.•The dividends are not of the type listed later under Dividends that are not qualified dividends .•You meet the holding period (discussed next).
Holding period. 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. 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. Instead, the seller will get the dividend.
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