Message Font: Serif | Sans-Serif
No. of Recommendations: 0
[[I am about to start my first DRIP, and was reading about all the tax calculations
one needs to do for DRIPs.]]

Right...they can get a bit messy

[[ Does it make sense to choose not to re-invest the dividends, and does that save
oneself a lot of hassle during tax-time?]]

In may save you some hassle, but it really defeats the purpose of a DRIP investment.

[[ As I see it, re-investing dividends is just
like sending in some extra cash every month. If I am doing that anyway, then
why not have the dividend sent to me and thus avoid the hassle of dealing with
fractional shares, and purchases at odd times, etc.]]

It's not that much of a hassle. And if you are sending in addinional money anyway, you will still have the same recordkeeping hassle. It's not difficult, just a bit time consuming. But you can set up your own spreadsheet and track the purchases pretty easily.

And the hassle doesn't really come when you buy, but when you sell. When you sell out your DRIP stock, if you sell it ALL at one time, many of your tax reporting hassles go away.

Some time it takes work to get rewards.

TMF Taxes
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.