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Tax Treatment of Dividend Income Dividend-paying investments may help meet your portfolio needs. Dividend income and its tax implications are important to you as an investor.
Considering taxes and dividend income, seasoned investors have learned the special qualified dividend treatment may increase their after-tax return when compared to nonqualified dividends.
For those investors whose income exceeds certain thresholds, they will need to keep an eye on the additional 3. Qualified dividends are paid to investors in common and preferred stock of U.
Dividends passed through by mutual funds or other regulated investment companies can be qualified or nonqualified, depending on the underlying securities held by the fund. If a fund receives a qualified dividend, the dividend will maintain its qualified status when passed through to shareholders.
Distributions from partnerships and real estate investment trusts typically are not characterized as qualified dividends.
Also, qualified dividends do not include distributions from preferred debt.
Dividends paid by certain foreign corporations may also be qualified. Treasury Keep in mind that the foreign corporate dividend may remain subject to foreign tax withholding. How does the qualified dividend tax treatment work? To qualify for the special tax treatment, shareholders must satisfy a certain holding period2 based on the type of stock held: For common stock, shareholders must own the stock for more than a day period containing the ex-dividend date.
For preferred stock, the owner must hold the shares for more than a day period including the ex-dividend date. Active traders should monitor their holding periods carefully to benefit from the qualified-dividend tax treatment.
Capital losses and offsetting qualified dividends Although dividends and long-term capital gains are taxed at the same rates, this does not mean capital losses can be used to offset dividends.
For more detailed information, contact your tax advisor. Keep in mind taxes certainly affect investment returns. The effects of taxes should be only one of many factors you consider when making investment decisions.
Before you make an investment, your Financial Advisor will work with you to consider a variety of additional factors, such as your long-term goals, time horizon, and risk tolerance.
Next steps Consider if dividend-paying stocks and mutual funds are appropriate investments for your portfolio. Look at the whole picture before you invest, including your goals regarding return, risk, time horizon, and taxes.
Determine if your income threshold is impacted by the 3. Talk with your Financial Advisor to determine if dividend-paying investments are right for your financial situation. In general, the exchange designates a stock as ex-dividend a few days before the record date. Certain hedge positions may suspend the holding period for this purpose.
Wells Fargo Advisors is not a tax or legal advisor. While this information is not intended to replace your discussions with your tax advisor, it may help you to comprehend the tax implications of your investments and plan efficiently going forward.
Dividends are not guaranteed and are subject to change or elimination. Connect With an Advisor.SAN FRANCISCO--(BUSINESS WIRE)--The Wells Fargo Income Opportunities Fund (NYSE American: EAD), a closed-end fund, announced today that the fund’s Board of Trustees has approved the commencement.
We structure our investments such that our managed funds can exit without the sale of the company. In the event that a business is performing on plan and less expensive capital is available, HP SCF will work with management to redeem our managed funds' liquidation preference and / or equity interest to provide a seamless transition for the business owner.
At Wells Fargo, you can invest in funds directly, through a brokerage account, or through an experienced financial professional. The information contained on this website is meant for the purposes of information only and is not intended to be investment, legal, tax or other advice, nor is it intended to be relied upon in making an investment or other decision.
Better Environment for Hedge Fund of Funds. Wells Fargo Investment Institute - June 19, Print Bloomberg, Wells Fargo Investment Institute, June Results for funds that go out of business are included in the index until the date that they cease operations. Therefore, these indices may not be complete or accurate.
Mutual fund overview for Wells Fargo Growth Fund;A (SGRAX), from MarketWatch.