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Two Harbors Investment Corp. Message Board

  • jeanevans_65807 jeanevans_65807 Dec 21, 2012 3:39 PM Flag

    2012 Dividend tax rate applicable to .55 div.

    I have now checked with 2 CPAs and both of them agree that with the REIT the last quarter dividend of the year is taxable on the 1099 for the 2012 year. So, even though we get the 55 cent/share dividend paid in Jan. 2013 it is taxed in OUR 2012 tax year. Therefore it is still at the present lower Bush tax cut rate for dividends. Both CPA's also said that TWO would be in huge trouble with the SEC for say that (the tax rate is for 2012) in a press release if it were not true. Sounds good to me...

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    • Actually this whole thread is academic.

      Go with the 1099 and you will be OK.

    • The 55 cents must be reported as earnings for 2012 becasue the record date is in 2012; it does not matter that you don't get the money until January. This is very standard and you can easily verify it on the 1040 tax instructions available on the IRS Web site. (This is a common question and I see it EVERY dang year. LOL.)

      As for "Bush tax cut rate for dividends," I have no idea what you mean. mREIT dividends are taxed as ordinary income -- they have never qualified for that 15% rate. Some REITs may report return-of-capital on your 1099. I seriously doubt that TWO had any ROC, otherwise they would not have declared the extra 20 cents as taxable income for 2012. Nevertheless, ROC would lower your cost basis and you would not pay a dime in taxes -- until your cost basis became zero. just FYI...

      • 2 Replies to sonnenwayne
      • Thanks for your reply. Glad to have someone that speaks up that knows. The IRS, I think tossed out the bit about the Bush tax cuts (lower dividend tax) because they had been receiving so many calls about the possible increase in the tax on dividends. You are totally right,thank you, about this having nothing really do do with all of that. Thank you so much for your straight forward answer. Now if we could get politians to be so straightforward and honest...

      • I spoke to the tax dep't at Schwab last week and they confirmed what one of their reps had told me. Date of record means nothing. It's when you actually receive your dividend that counts. As Schwab gets all my 1099s and sends me my tax statement for the previous year I guess I'll have to wait to see who's right on this issue.

    • You will probably get a letter from the IRS in 2014 asking why you did not pay taxes on the Jan 2013 distribution.For individuals, dividends/distributions are taxed in the year they are received by the individual. I would fire those to TWO CPAs you are talking TWO. If I am wrong I apologize, but I don't think mREITs are treated any different than other companies when it comes to dividends/distributions and how/when they are taxed. Good luck and have a nice holiday season.

      • 1 Reply to icylander1
      • I just spoke to the IRS today and asked them also. After some checking they agreed that the REITs have that stipulation in regards to taxes. They repeated back to me that the TWO 55 cent dividend I was asking about WOULD be taxes on my 2012 taxes at the lower rate even though it is actually paid in 2013. Now I am not saying the IRS doesn't make mistakes - we all know they do but that is what I was told by their representative. I sure hope that it is correct. Has anyone else talked to the IRS or their accountants, CPA's or anyone about it? Hope you all have a very Merry Christmas!

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