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Hi,
Anyone know of a spreadsheet or shareware program for running tax projections for the current year? I plan to pick up Turbotax when it is released, but I could use something now...

Thanks,
Fred
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Fred,

Turbotax.com has a free tax estimator.. pretty straightforward to use:
http://www.turbotax.com/calculators/estimator/index.html

Jimmy
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Turbotax.com has a free tax estimator.

NUTS! I searched the Intuit web site, and I googled for it, and I got null results both times. After I saw your reply, I checked the TurboTax web site, and there's a link to their calculators, plain as the nose on my face. I'm really PO'd with myself, but thanks for pointing out the path.

David Jacobs
TMFDj111
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If you want a free spreadsheet so you can easily change variables and see line by line results, go to www.edcosoft.com/qitc.html and download their demonstrator. Handles AMT, phaseouts, Etc. Your biggest problem will be trying to figure out which dividends will be Qualified. By the way Edcosoft will have the 2004 calculator on their site to download in early January or sooner. ed
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Your biggest problem will be trying to figure out which dividends will be Qualified.

I note on my latest Schwab statement that they are putting the word "qualified" by my dividends.

Are any other brokers doing this?
ted
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Excuse my interference, but what is "Qualified" Dividends? Do they apply on all taxable accounts a person owns: Mutual funds, DRIPs, and Stock Trading in a brokerage account?
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Excuse my interference, but what is "Qualified" Dividends? Do they apply on all taxable accounts a person owns: Mutual funds, DRIPs, and Stock Trading in a brokerage account?

Welcome to the world of 2003 taxes! Qualified dividends are those that qualify to be taxed at long-term capital gains rates, not ordinary income rates.

Qualified dividends include dividends on domestic corporations and certain foreign corporations if the underlying shares are held for 60 days in the 120 day window starting 60 days before the ex-dividend date. Qualified dividends may, but generally do not, include dividends from REITS. Mutual funds will generate both qualifying and non-qualifying dividends. Money market and bond funds will not qualify. Certain other less common investments will also not qualify.

BTW, dividends on foreign stocks which trade OTC do not qualify. (Note, this does not include Nasdaq. Nasdaq-traded foreign stocks may generate qualifying dividends).

Ira
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Thanks for the reply, but now I got another question. Do Mutual Funds indicate on 1099 which Dividends are Qualified and which are not? If not, how would I be able to figure that out?
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Do Mutual Funds indicate on 1099 which Dividends are Qualified and which are not?

This is the first year for qualified dividends, and presumably mutual funds and other payers of dividends will sort them into two piles, qualifed and non-qualified. (That's what the new 1099-DIV form shows: Total Divs and Qualifed Divs...)

If not, how would I be able to figure that out?

If they don't, then you'll be out of luck. But worrying about this now is sort of like worrying about, say, an asteroid slamming into the earth in 2037.

Lorenzo
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Do Mutual Funds indicate on 1099 which Dividends are Qualified and which are not?

This is the first year for qualified dividends, and presumably mutual funds and other payers of dividends will sort them into two piles, qualifed and non-qualified. (That's what the new 1099-DIV form shows: Total Divs and Qualifed Divs...)


If only life were that simple. It is very likely that many of us will get two 1099-DIVs... one issued in January (because the law says that they must be issued by 1/31) and another one in mid-March, after the end of the qualified dividend holding period for late December ex-dividend dates. The March 1099-DIV will have corrected numbers (the adjustments could go either way). Those who file quickly may find themselves amending their returns.

Ira
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Those who file quickly may find themselves amending their returns.

Well, that's amazingly dumb. Hmmmm. Maybe it will be profitable, after all, to worry about that asteroid.

Lorenzo
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Lorenzo2 wrote: This is the first year for qualified dividends, and presumably mutual funds and other payers of dividends will sort them into two piles, qualifed and non-qualified.

Huh, hmmm *a deep sigh*, it sounds complicated. If 2003 is the first year for Qualified Dividends, what was before? Was it simpler and all dividends were called dividends without extra adjective (Qualified or Non-qualified)?
I'm not worried about 2003 since I have no taxable accounts (except some interest on my CD). However, I'm curious whether it will be easier for 2004 because my goal is to open a taxable investment account in January.

Thank you for your answers and a nice joke <-- Lorenzo2.
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what was before?

Well, before now, there were just... dividends. Much easier. But wait, it gets worse! It used to be that if stock you owned was loaned out to, say, a short seller, and while it was in his possession a dividend was paid, he gave you a cash payment in place of the dividend. That's only fair, since it's your stock, not his. Those cash payments weren't really dividends, but the distinction was unimportant, since dividends and cash payments were both taxed as ordinary income. But now, dividends - the qualified variety, that is - get preferential tax treatment, and the distinction is important. If you get one of these cash payments, you get to pay the full, ordinary income tax rate on the payment, rather than the lower rate you would pay if you received a dividend. Bummer. But don't worry about this just yet - likely the IRS won't enforce this little quirk, because nobody quite knows what to do about it. Just another little tax twist brought to you by those fun-loving guys and gals on Capitol Hill.

Lorenzo
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what was before?

Well, before now, there were just... dividends. Much easier. But wait, it gets worse! It used to be that if stock you owned was loaned out to, say, a short seller, and while it was in his possession a dividend was paid, he gave you a cash payment in place of the dividend. That's only fair, since it's your stock, not his. Those cash payments weren't really dividends, but the distinction was unimportant, since dividends and cash payments were both taxed as ordinary income. But now, dividends - the qualified variety, that is - get preferential tax treatment, and the distinction is important. If you get one of these cash payments, you get to pay the full, ordinary income tax rate on the payment, rather than the lower rate you would pay if you received a dividend. Bummer. But don't worry about this just yet - likely the IRS won't enforce this little quirk, because nobody quite knows what to do about it. Just another little tax twist brought to you by those fun-loving guys and gals on Capitol Hill.


Two comments. Dividends were just dividends....except if you go back far enough. Back in the 1980's (maybe the 1970's) there were also qualifying and non-qualifying dividends. The difference then was that you could exclude the first $200 of qualifying dividends from taxation altogether. Beyond the $200 exclusion, all dividends were taxed as ordinary income. And, yes, mutual funds had to tell you how much of their dividend qualified for the exclusion and how much did not.

The IRS has said that they will enforce the payment-in-lieu-of-dividend rule starting in 2004. They recognize that the data collection systems at the brokerage houses could be difficult to modify to retroactively identify these payments (the law was passed mid-year, but applies as of 1/1/03). If you don't want to be affected by this, check your brokerage agreement. If you signed a margin agreement, and most brokerage clients have, the broker can loan your share out. You have two options, make sure that all of your holdings are kept in a "cash" account (and that's not always obvious...you don't have to take a margin loan to be in a margin account) or cancel the margin agreement on your account.

Ira

Ira
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