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Investing - Dividend Income Stream Questions

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ChumSlickJon

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Anyone here have experience with Dividend's, Qualified vs. Ordinary and how to handle taxation on them?  

I use turbo tax and pay extra for the version that allows you to import investments.  This year I got hit with a charge for under payment.  It looks like they are counting my ordinary dividends as a business and as such expect my to pay quarterly?  The charge wasn't for very much money, but should I be sending money to the IRS every quarter out of these ordinary dividends?  

Edited by ChumSlickJon

 

Delete from SOL_Users where username like 'wasy','Seal'....

 

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I cannot answer the specific question, but I pay quarterly to IRS and NYS just to avoid the underpayment issue. Last year my employer started withholding monthly performance comp checks at 22% meaning all of us will be underpaying. I am sending IRS extra 15% just to stay even. And I pay NYS a prorata amount based on my days in NYS to keep them out of my hair. 

“No nation in history has survived once its borders were destroyed, once its citizenship was rendered no different from mere residence, and once its neighbors with impunity undermined its sovereignty.”

- Victor Davis Hanson 

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Qualified vs ordinary is just what tax rate you pay I think.  LT capital gains vs ordinary income. You get penalized if you under withhold on whatever. I have other income streams over withhold to compensate but it’s only a guess on my part.  

"I have ... put a lump of ice into an equal quantity of water ...  if a little sea salt be added to the water we shall produce a fluid sensibly colder than the ice was in the beginning, which has appeared a curious and puzzling thing to those unacquainted with the general fact."- Joseph Black

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Be better off 'finding' some deductions that offset.

"You must never confuse faith that you will prevail in the end -- which you can never afford to loose -- with the discipline to confront the most brutal facts of your current reality, whatever they may be .."

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Just now, Kml said:

You can pay estimated taxes to the feds, they never turn away money. People that are self employed do this. 

 

 

Yep. Prolly do it online now. My method was to low ball estimated payments (not stupid but lower..). Then file an extension, do the taxes to see how much I owed. "Find' deductions to offset that amount to 0 (or close) then file. It gives you like an extra 4/5 months to get the money and 'find' the deductions.

"You must never confuse faith that you will prevail in the end -- which you can never afford to loose -- with the discipline to confront the most brutal facts of your current reality, whatever they may be .."

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I should note that I wasn't pissing away the money, it was funding a profit sharing plan. 

"You must never confuse faith that you will prevail in the end -- which you can never afford to loose -- with the discipline to confront the most brutal facts of your current reality, whatever they may be .."

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33 mins ago, ChumSlickJon said:

Anyone here have experience with Dividend's, Qualified vs. Ordinary and how to handle taxation on them?  

I use turbo tax and pay extra for the version that allows you to import investments.  This year I got hit with a charge for under payment.  It looks like they are counting my ordinary dividends as a business and as such expect my to pay quarterly?  The charge wasn't for very much money, but should I be sending money to the IRS every quarter out of these ordinary dividends?  

I don’t know why they counted as a business. I get turbo tax deluxe and never have a issue like that.

If you use eclairs in your example, he will get it right away. MikeMc

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1 min ago, JMB said:

I don’t know why they counted as a business. I get turbo tax deluxe and never have a issue like that.

I'm gonna call them and find out why.  It's a REIT and they say certain Real Estate investments are treated that way.  :shrug:  I want some clarity on that.  I mean, the pay is good I just want to make sure I'm doing it right.  

 

Delete from SOL_Users where username like 'wasy','Seal'....

 

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