Financial Planning: Dividends
Test your knowledge with our
Financial Planning quiz.
Articles
(Jump to FAQs)
Tom Davison
This article series looks at the effects of dividends on your planning for stock options and restricted stock. Part 1 explains basic dividend rules.
Tom Davison
This article series looks at the effect of dividends on your financial planning for stock grants. Part 2 looks at dividend strategy.
Tim Kochis
Once your stock options vest, you need a strategy to maximize their wealth-building value. But no single strategy fits everyone. This article discusses various approaches to planning your option exercises.
Internal Revenue Service
This extensive IRS guide covers many topics related to reporting income and expenses from investments, including dividends (Chapter 1), capital gains (Chapter 4), and interest on loans (Chapter 3).
Return to top of this page FAQs
(Jump to articles)
In theory, when a company pays a dividend, particularly a large special dividend, its stock value declines by...
Although normally you cannot transfer them until vesting, shares of restricted stock are issued to you and are outstanding in your name from the time of grant. Most stock plans...
Dividends that are earned on restricted stock are considered compensation income, which is reported on your W-2 (1099-MISC for nonemployees, such as directors). The dividends can be "qualified dividends" and thus taxed at a lower rate when...
When a company pays dividends on outstanding shares of stock, it can choose...
Dividend rights are not mandatory. When a company pays dividends on outstanding shares of stock, it can also...
No. Until you exercise a stock option, you do not have the rights of a...
To receive a dividend you must own a stock on the record date, so you want to be aware of the ex-dividend date. Also consider...
Instead of paying cash dividends, a small number of companies require...
Dividends and the shareholder voting rights that go with restricted stock do not...
The holding period to determine whether a dividend is "qualified" and taxed at the lower 15% rate starts on the date after the option is exercised and the stock is held...
Qualified dividends do receive special tax treatment when they are part of your net capital gain. The amount of AMT is capped by the...
The traditional strategy with NQSOs recommends waiting till...
Although qualified dividends are taxed at the...
This depends on the approach you take. For most taxpayers, qualified dividends are taxed at a top rate of...
If you take out a margin loan from your brokerage firm, it can lend your shares to short sellers. If that stock pays a dividend while your shares are on loan, you will...
Maybe not. You are probably thinking that you can borrow money, such as with a margin loan, deduct this as an investment interest deduction, and net it against investment income...
Return to top of FAQs Return to top of page
CFP® Credit
Tax errors can be costly! Don't draw unwanted attention from the IRS. Our Tax Center explains and illustrates the tax rules for sales of company stock, W-2s, withholding, estimated taxes, AMT, and more.
How Dividends Impact Your Strategy For Stock Options And Restricted Stock (Part 1) 
