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POSCO Message Board

  • texasbroker2000 texasbroker2000 Apr 19, 2005 11:13 AM Flag

    Dividend question

    What is the net dividend payable to US shareholders after the foreign taxes are withheld or paid? Also do you have to report the gross dividend and then deduct the foreign taxes paid or does the 1099 reflect the net dividend received.

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    • <<< What is the net dividend payable to US shareholders after the foreign taxes are withheld or paid? Also do you have to report the gross dividend and then deduct the foreign taxes paid or does the 1099 reflect the net dividend received. >>>

      The dividend varies year to year, but last year they paid 8,000 SK won per share, which is 2,000 SK won per ADR - that's roughly $2/share at the current exchange rate. They paid it for two dates, one was in June and amounted to about 28 cents, the other was in October and was about $1.61 (yes, this short of $2, but that shows that the US dollar has been sinking).

      Evidently the witholding varies, but at my account (US Citizen, US broker) the witholding was 27.5%. I got the rest as cash. I just used the dividend amount stated on my 1099, but I feel certain it was the gross amount, as you suggested. So for the 2004 taxes, I'd received 72.5% of the dividend in cash, and the 26.5% became essentially a credit against my overall US Federal tax. Example, if your total Posco dividends equalled $1,000 then you'd have been paid $725 (assuming your witholding was the same as mine). Then you'd wind up reporting the $1,000 gross dividend, but you'd get to reduce your US taxes by $265. There's a line on the 1040 tax form for the foreign dividend witholding, and the amount witheld gets taken right off the bottom line of your taxes owed. It's quite easy, just use the 1099 forms as presented, and fill in the 1040, being sure of course to fill in the foreign tax witheld line, and follow through on the calculations as presented on the 1040.

      One thing to consider also, the witholding deduction is for the year in which the dividend was received, not when the stock went ex dividend. So that $1.61 dividend that we got if we held the stock in late December of last year, will actually be an item for the 2005 tax year (for both the gross dividend and the witholding deduction).

      • 1 Reply to Alex1444
      • Whoops, that should read:

        So for the 2004 taxes, I'd received 72.5% of the dividend in cash, and the 27.5% became essentially a credit against my overall US Federal tax. Example, if your total Posco dividends equalled $1,000 then you'd have been paid $725 (assuming your witholding was the same as mine). Then you'd wind up reporting the $1,000 gross dividend, but you'd get to reduce your US taxes by $275.

 
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