Hi all. Can you delay paying income taxes on dividends with DRIPs? Obviously if you take a dividend payout in cash you have to pay taxes on it (except with a Roth IRA). I'm asking because I have some dividend stocks in my personal account.Thanks!
Can you delay paying income taxes on dividends with DRIPs? No.--Peter
In a non-taxed deffered account, it is all treated as income. One caveat, if you have held the dividend generating stock for longer than a year, IIRC, the dividends might be "qualified" and taxed at a lower rate.Not sure if recent tax code changes have changed that or not.JLC
Remember to track the cost basis for the shares purchased with dividends.
... if you have held the dividend generating stock for longer than a year, IIRC, the dividends might be "qualified" and taxed at a lower rate.Actually, the holding period for qualified dividends is 60 days.http://en.wikipedia.org/wiki/Qualified_dividendmeet holding period requirements: 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.
Thanks for the replies. I can see why it would be a good idea to keep track of the cost basis of the shares purchased with dividends. Good suggestion.
Also good info about qualifying dividends.
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