"Wayne Brasch" <waynebrasch[at]stowetel.com> wrote in
- quote -

Probably not worth it on a $100 1099, but the "dividends"
that represent interest on US Govt obligations should not be
taxable on a state return.

scott s.

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"Dennis G. Rears" <drears[at]runningpagespam.org> wrote:

- quote -

I am not an accountant. But.. A money market can be taxed
either way depending on who you get it from. Most brokerage
MM issue 1099-DIV. Banks and say for example GMAC send
1099-INT's If I get a 1099-INT then it is entered as
interest. When my broker sends me a 1099-DIV, then that is a
dividend. Even if you made a mistake you probably taxed
yourself at the same rate. But I would think the 1099-XXX
would stear you in the right direction.

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"Dennis G. Rears" <drears[at]runningpagespam.org> wrote:

- quote -

That income from a money market account is interest income
to you. I don't see why it would be necessary to amend any
tax return because both of these (interest and dividends)
are taxed at the same rate depending on the tax bracket you
have to use based on the amount of taxable income you have.

Wayne Brasch, CPA, M. S. Taxation

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Dennis G. Rears <drears[at]runningpagespam.org> wrote:

- quote -

If this is a tax exempt municipal money market fund, then
indeed, the dividends should have been reported on Line 8b
as tax exempt interest.

But if not, I assume last year you received Form 1099-DIV
reporting this as dividends, and properly did so, so don't
have any second thoughts.

For 2003, a new category of tax favored dividends called
Qualified Dividends has been created as of 1/1/03 and your
money market dividends are non-qualified dividends, taxed
the same way as interest.

Your 1099-DIV for this year will probably show the USAA MM
fund paying ordinary dividends but not qualified dividends.
The tax on interest and ordinary dividends which are not
qualified dividends is the same.

Bottom line: Don't worry about it, and don't go back and
change anything unless this is a municipal MM fund. __

Art Kamlet ArtKamlet [at] AOL.com Columbus OH K2PZH

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Dennis G. Rears wrote:

- quote -

They are dividends and are reported as such. However, if
you look at the 2003 tax forms you will discover a new line
called "Qualified Dividends." Qualified dividends are ones
that are subject to capital gains tax rates. The dividends
from your money market fund are not qualified dividends
because essentially they are nothing more than interest
being passed through to you.

--

Alan
http://taxtopics.net

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Dennis posted:

- quote -

Even though they are called dividends, they are considered
interest when it comes to the issue of the new,
more-favorable treatment of dividends under the tax law
changes of 2003.

Other than that, you reported them as income, and tax
assessed would have been the same -- with the only
difference being that some money was shifted from line 8a to
line 9. It seems unlikely that would matter, especially
when the amounts were relatively inconsequential.

In fact, since these amounts were reported on Form 1099-DIV,
many, if not most, TPs have been including them in Part II,
as dividends.

IMO, you should not file amended returns.

Bill

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Dennis posted:

- quote -

Even though they are called dividends, they are considered
interest when it comes to the issue of the new,
more-favorable treatment of dividends under the tax law
changes of 2003.

Other than that, you reported them as income, and tax
assessed would have been the same -- with the only
difference being that some money was shifted from line 8a to
line 9. It seems unlikely that would matter, especially
when the amounts were relatively inconsequential.

In fact, since these amounts were reported on Form 1099-DIV,
many, if not most, TPs have been including them in Part II,
as dividends.

IMO, you should not file amended returns.

Bill

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"Dennis G. Rears" <drears[at]runningpagespam.org> wrote:

- quote -

If you received a 1099-INT, treat it as interest. If you
received a 1099-DIV, treat it as dividends.

I believe brokerage money market fund dividends are usually
treated as dividends.

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA

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I have a money market fund (USAA) that I use for my sweep
account for my brokerage account. Every month I earn
Dividends from this fund. For the last few years I have
been treating this as dividends on my tax returns. I use
Quicken & TurboTax if it matters. I heard today that the
money I head from my money market fund is interest not
dividends. Questions I have include:

(1) Is the income dividends or interest?
(2) if it is interest do I need to file an amended tax
return. I think the most I earned was slightly less than
$100.00

thanks in advance.

dennis

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