In my current situation, mutual funds in both my Roth IRA and taxable account are distributing their dividends as cash. The reason I elected for this instead of automatically re-investing the dividends is so that I can choose where to reinvest the dividend cash in order to help rebalance my asset allocation. My question is, is there a difference on taxation of dividends that are distributed as cash vs automatically reinvested into the originating fund? I recognize that the taxation of dividends doesn't matter for my Roth IRA since everything grows tax-free.
Just to clarify, I'm not asking about the difference in taxation between "qualified" dividends and "non-qualified" dividends. My understanding is that qualified dividends are subject to long-term capital gains tax and non-qualified dividends are subject to ordinary income tax.
Just to clarify, I'm not asking about the difference in taxation between "qualified" dividends and "non-qualified" dividends. My understanding is that qualified dividends are subject to long-term capital gains tax and non-qualified dividends are subject to ordinary income tax.
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