US Qualified Dividend

Are your US-invested clients paying more tax than they should?

Here's a scenario that plays out thousands of times each year:

A European investor holds US stocks through their Luxembourg bank. They receive $10,000 in dividends. Their tax advisor files using the standard rate and they pay up to 37% US tax.

But wait. Some of those dividends might qualify for reduced rates of 0%, 15%, or 20%.

The challenge: Qualified vs. Ordinary Dividends

Under IRC § 1(h)(11), the IRS distinguishes between:

Qualified Dividends → Reduced rates (0-20% depending on income)

Ordinary Dividends → Standard income tax (up to 37%)

The difference? Thousands in tax savings per year.

What makes a dividend "qualified"?

It's more complex than most banks realize:

• Must be from an eligible corporation (US company or ADR from treaty country)
• Must meet holding period requirements (61+ days in a 121-day window)
• Cannot be certain REIT distributions, capital gain distributions, or payments in lieu

The problem for banks:

Most standard tax reports don't differentiate. 

They lump all dividends together, forcing clients to:

• Manually research each security
• Calculate holding periods across transactions
• Determine treaty eligibility
• Risk errors or overpayment

When Washington goes dark, AlphaTax stays vigilant.

Our systems automatically:

• Identify qualified vs. ordinary dividends per IRC requirements
• Track holding periods across the ex-dividend date windows
• Flag exclusions (REITs, short positions, payments in lieu)
• Provide documentation for reduced rate claims

The bottom line:

For clients with significant US equity exposure, proper qualified dividend identification isn't optional—it's worth thousands annually.

Is your tax reporting system capturing this distinction? Or are your clients leaving money on the table?