1/5 & 1/12/2018
I contributed $105 to my IRA and $25 to my brokerage account each week.
I received $0.12 dividend from the AAP stock I recently sold, this was paid in cash into my brokerage account. This is considered taxable income and I will pay taxes on this as income. I didn’t own the stock but still received the dividend, see below for the explanation.
I received $9.68 dividend payment from my GSK stock, this was paid as cash into my IRA account. This is not taxable as long as I leave the money in the IRA account.
Dividend Dates Explained
On 1/4/2018 I sold the 2 shares of AAP I had. On 1/5/2018 I received a dividend payment despite not currently holding the stock. How is this possible? Dividends have 2 key dates to remember, the ex-dividend date and the dividend payable date. See the image below.
Typically, as shown above, these dates are 2 days apart. The “Ex-Dividend Date” is the cut-off date for owning the stock before receiving the dividend payment. The “Dividend Payable Date” is the date the dividend will be paid to those who owned the stock before the Ex-Dividend date. In the case of AAP, the Ex-Dividend date was 12/17/2017 and the dividend payable date was 1/5/2018. You must own the stock before the markets open on the Ex-Dividend date to receive the dividend. You will still receive the dividend even if you sell the stock after that Ex-Dividend date as I did with the AAP stock.
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