How can your 1099-DIV know if dividends are qualified, if you buy them late in the year?

Question

Let's assume you buy an ETF or a share late in December, and it provides a dividend between your buying and the end of the year. Let's also assume this dividend is (at least partly) of the type eligible to be a qualified dividend - depending on your holding period: "at least 61 days of the 121 days starting from 60 days before ex-dividend".

When you get your 1099-DIV for the year (typically mid-February), your holding period might not yet be 61 days (if you bought after December 17th or so), but it could become 61 days - or not - depending on your potential sell-decision after the 1099-DIV is provided.

Obviously, the 1099-DIV cannot predict your decision; so either

• specifically you will get yours later than everyone else?
• or the form will list them as 'not-qualified' and you will get a corrected form later?
• or you're out of luck, and they stay listed as 'not-qualified', and you can try to convince the IRS that the form is wrong?

Basically, I'd like to understand if I need to wait for a corrected form, or if I should better avoid the situation to begin with, to avoid losing money.

Answer 1

specifically you will get yours later than everyone else?

No.

or the form will list them as 'not-qualified' and you will get a corrected form later?

Yes, this happens to me quite frequently.

The brokers are required to provide the 1099-DIV by mid-February, however most brokerages only send them out in March precisely because of this 61 days holding period (which ends, at the latest, early March). The IRS allows extending the consolidated 1099 deadlines till March 15th.

But even then, often times brokerages end up recalculating and adjusting numbers based on additional information that may come in late. It may be because they ended up not making the deadline with their computations, or because someone else reported late to them (e.g.: foreign taxes, special treatment qualifications, wash sales, etc), and they will issue a corrected 1099.

If you file too early and the brokerage later issues a corrected 1099 - you can file an amended 1040X to request the refund.

I assume that my brokerage 1099s are not final until end of March, but I think there was one year when I already filed sometime early April, and a corrected 1099 showed up in my mailbox a couple of days later.