Question

I have a question regarding taxes qualified dividends. After I filed my return, I received a revised Form 1099-DIV that reclassified my stock dividends. They changed from ordinary dividends to qualified dividends. Should I amend my return?

Answer

Yes, you can submit a 1040X. Qualified dividends are taxed at a lower tax rate then ordinary dividends. The reclassification may result in a refund that’s worth the time and expense of filing an amended return.

The maximum tax rate for capital gains also applies to qualified dividends. So:

  • If the regular tax rate that would apply to your capital gains is 39.6% or higher, the dividends are subject to the 20% rate.
  • If the regular tax rate that would apply to your capital gains is 25% to 35% or higher, the dividends are subject to the 15% rate.
  • If the regular tax rate that would apply to your capital gains is lower than 25%, the dividends are subject to the 0% rate.

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