Save on Tax -- Counting down to April-18-2011

[Individual]Ordinary Dividends and Qualified Dividends (Mar-04-2011, 46 days left)

2011-03-07T18:28:00.001-08:00

Ordinary dividends are ordinary income, rather than capital gains. You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation tells you otherwise. It is reported in 1099-DIV box 1a.

Qualified Dividends: it is reported in 1099-DIV box 1b

It is subject to net capital gain.

Tax rate for Qualified dividends
15%	If the regular tax rate is 25% or higher
0%	If the regular tax rate is lower than 25%

All the following requirements must be met to be qualified for this special treatment:

The dividends must have been paid by a U.S. corporation or a qualified foreign corporation.
The dividends are not of the type listed :

--capital gain distributions

--Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U.S. building and loan associations, U.S. savings and loan associations, federal savings and loan associations, and similar financial institutions.

--Dividends from a corporation that is a tax-exempt organization or farmer's cooperative

--Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership olan (ESOP)

--Dividends on any share of stock to the extent you are obligated to make related payments for positions in substantially similar or related property

--Payments in lieu of dividends, but only if you know the payment are not qualified dividends

--Payments shown in Form 1099-DIV, box 1b to the extent you know it's not qualified dividends

You meet the holding period requirement:

Common Stock	more than 60 days during the 121-day period that begins 60 days before the ex-dividend date ( the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment.)
Preferred stock	More than 90 days during the 181 days

PSQ

Sell a bond	Part of sales price represents interest accrued to the date of sale. You must include that part of the sales price as interest income for the year of sale.
Buy a bond	Part of purchase price represents interest accrued before the date of purchase, you must treat this part as a return of your capital investment, rather than interest income. You should reduce your basis in the bond.

Investment income of certain children	Taxed at the parent's tax rate: Investment income > 1,900, Form 8615 is required Investment income <> May choose to include child's interest and dividends on the parent's return: Form 8814.
Beneficiary of an estate or trust	Generally taxable income You should receive Form 1041 schedule K-1
Joint accounts	Joint saving account or bond, joint tenants, etc. Each share of any interest income is determined by local law
Income from property given to a child	Taxable to the child, except that any part used to satisfy a legal obligation to support the child is taxable to the parent.
Savings account with parent as trustee	Taxable to the child if, under the law of the state in which the child resides, both of the following are true: The savings account legally belongs to the child The parents are not legally permitted to use any of the funds to support the child
Exempt-interest dividends	Nontaxable income. Generally show in box 8 of 1099-INT If it is paid from specified private activity bonds may be subject to the alternative minimum tax.
Interest on VA dividends	Interest on insurance dividends left on deposit with the department of Veterans Affairs (VA) is nontaxable.
Individual Retirement arrangements (IRA)	Interest on a Roth IRA is nontaxable. Interest on a traditional IRA is tax deferred. You include it as your income when you make withdrawals from the IRA

Nonstatutory Option	Usually will have income when you receive the option, exercise the option, or sell or dispose of stock option
Statutory Option	Income happens when you sell or exchange your stock.

Nontaxable income	Taxable income
Cost of up to 50,000 of group-term life insurance coverage provided by employer	Excess of 50,000 the cost of coverage provided by employer - any amount you pay toward the purchase of insurance Multiple employers: you only can exclude total cost of 50,000 of coverage no matter the insurance is provided by a single employer or multiple employer. So you must adjust your taxable income. Limits to subtraction: you cannot reduce the amount to include in your income by: Payments for coverage in a different tax year, Payments for coverage through a cafeteria plan, unless the payments are after-tax contributions, Payments for coverage not taxed to you because of the exceptions .
	Permanent benefits=the cost of the permanent benefits - the amount you pay for them. Examples are paid-up or cash surrender value
Entire cost excluded: if any of the following circumstances apply: --Permanently and totally disabled and have ended your employment --Employer is the beneficiary of the policy --A charitable organization to which contributions are deductible is the only beneficiary --the plan existed on Jan-1-1984, and a) you retired before Jan-2-1984; b) you reached age 55 before Jan-2-1984 and employed in 1983	Entire cost taxed: if either of the following circumstances apply: --The insurance is provided by your employer through a qualified employees' trust, such as a pension trust or a qualified annuity plan. --You are a key employee and employer's plan discriminates in favor of key employees.

If your employer provides you with the free or low-cost use of an employer-operated gym or other athletic club on your employer’s premises	If your employer pays for a fitness program at an off-site resort hotel or athletic club
the value is not included in your income	the value is included in your income

Turkey, Ham, etc.	Cash, gift certificate or similar item that you easily can exchange for cash
Nontaxable	Taxable as extra salary or wages regardless of the amount involved

Employer pay the premium	Employee pay the premium	Both pay the premium
The benefits are taxable	The benefits are nontaxable	The benefits are taxable only the amount due to employer's payments

If you include the premiums as you income	If you don't include the premiums as your income
The benefits are nontaxable	The benefits are taxable

Save on Tax -- Counting down to April-18-2011

[Individual]Ordinary Dividends and Qualified Dividends (Mar-04-2011, 46 days left)

[Individual]Original Issue Discount --OID (Mar-03-2011, 47 days left)

[Individual]U.S. Treasury Bills, Notes and Bonds (Mar-03-2011, 47 days left)

[Individual]Taxable Interest Income 3 (Mar-02-2011, 48 days left)

[Individual]Taxable Interest Income 2 (Mar-01-2011, 49 days left)

[Individual]Taxable Interest Income 1 (Feb-28-2011, 50 days left)

[Individual]Interest Income -- General (Feb-27-2011, 51 days left)

[Individual]Retirement Plan Contributions (Feb-26-2011, 52 days left)

[Individual]Restricted Property and Stock Options (Feb-25-2011, 53 days left)

[Individual]Transportation (Feb-24-2011, 54 days left)

[Individual]Don't forget to report your tips (Feb-23-2011, 55 days left)

[Individual]Accident or Health Plan 2 (Feb-22-2011, 56 days left)

[Individual]Accident or Health Plan 1 (Feb-21-2011, 57 days left)

[Individual] Adoption 2 --Credit (Feb-20-2011, 58 days left)

[Individual]Adoption 1 -- Exclusion for Employer-Provided Adoption Benefits (Feb-19-2011, 59 days left)

[Individual]Financial Counseling Fees (Feb-18-2011, 60 days left)

[Individual]Group-Term Life Insurance (Feb-17-2011, 61 days left)

[Individual]Dependent Care Benefits (Feb-16-2011, 62 days left)

[Individual]Athletic Facilities & Employee Discount (Feb-15-2011, 63 days left)

[Individual]De Minimis (Minimal) Benefits and No-additional-cost services (Feb-14-2011, 64 days left)

[Individual]Fringe Benefits -- General(Feb-13-2011, 65 days left)

[Individual]Social security and Medicare taxes paid by employer & Stock appreciation rights (Feb-12-2011, 66 days left)

[Individual]Sick pay (Feb-11-2011, 67 days left)

[Individual]Severance pay (Feb-10-2011, 68 days left)

[Individual]Note received for services (Feb-9-2011, 69 days left)