Disclaimer:
It is important to note that the dates below are just general guidelines. The specific dates for a particular dividend may vary depending on the company's policies. Investors should always check with the company directly to confirm the dates for any dividend that they are interested in receiving.
- Dividend-paying stocks are popular alternatives to bonds for investors who want to generate passive income.
- Retirees often invest in dividends so they can pay their living expenses without having to sell stocks.
- Dividends are distributions paid by companies on earnings to their investors.
- Investors can choose to reinvest their dividends or take them in cash.
- Qualified dividends are paid by stocks that are owned for at least the required holding period.
- Ordinary or non-qualified dividends are either Cash dividends or dividends paid by stocks that are owned for less than the required holding period.
Tax Rules:
- Like all income, dividends are subject to taxes. The tax rates depend on whether dividends are considered qualified or non-qualified.
- Ordinary or non-qualified dividends dividends are taxed at an investor's ordinary income tax rate.
- Qualified dividends are taxed as capital gains.
- Reinvested dividends are treated as if you actually received the cash and are taxed accordingly.
- Your “qualified” dividends may be taxed at 0% if your taxable income falls below $41,676 (if single or Married Filing Separately), $55,801 (if Head of Household), or $83,351 (if (Married Filing Jointly or qualifying widow/widower) (tax year 2022).
- Form 1099-DIV Dividends and Distributions is the form financial institutions typically use to report information to you and the IRS about dividends and certain other distributions paid to you.
- The financial institutions are required to fill out this form if your total dividends and other distributions for a year exceed $10. It includes information about the payer of the dividends, the recipient of the dividends, the type and amount of dividends paid, and any federal or state income taxes withheld.
- Schedule B Interest and Ordinary Dividends is the schedule you use to list interest and ordinary dividends when filing your tax return with the IRS. As far as dividends go, you only have to use this form if you have over $1,500 in taxable interest or ordinary dividends in a tax year, or if you receive interest or ordinary dividends as a nominee.
- The IRS states you must also use this form to report dividends if you are a signer on an account in a foreign country, or if you grant, transfer, or receive any funds to or from a foreign trust. You may have to use Schedule B for other situations as well.
- To report your dividends on your tax return and pay the applicable taxes, you include the appropriate amounts on Form 1040 and fill out the related line items on Schedule B if required.
- Brokerages and other companies required to report dividends on Form 1099-DIV must do so by February 1. Taxes for dividends are paid with your income tax return, due in April generally.
| Date | Name | Significance |
|---|---|---|
| Declaration date | The date on which the company's board of directors announces the dividend. | This is the first date that investors can know for sure whether or not a dividend will be paid. |
| Ex-dividend date | The date one day before the record date. | On this date, the stock price typically drops by the amount of the dividend. New buyers of the stock after this date will not be entitled to receive the dividend. |
| Record date | The date on which the company determines who is entitled to receive the dividend. | Investors must be listed as shareholders on the company's books as of this date in order to receive the dividend. |
| Payable date | The date on which the company actually pays the dividend to shareholders. | This is the date that shareholders will actually receive the dividend in their accounts. |