Qualified dividend holding period checker
Hold the shares long enough and the dividend is taxed at the lower rate. A day short and it is taxed as ordinary income. Put in your dates and see which side you landed on.
How it works: for common stock the dividend is qualified only if you held the shares more than 60 days inside the 121-day stretch that starts 60 days before the ex-dividend date. For preferred shares whose dividends cover a period of more than 366 days it is more than 90 days inside 181 days, starting 90 days before. Days are counted IRS Publication 550's way: the day you sold counts, the day you bought does not. Then some days get taken back off. Pub 550 says you cannot count any day you had an option to sell, were short the same stock, were the writer of a call on it, or had your risk of loss cut by an offsetting position. So this checker takes out every day a written call was open, from the day you sold it through the day it expired or you bought it back. Still holding? The window runs 60 (or 90) days past the ex-dividend date, so the count assumes you hold to the end of it.
Why 61 days is worth real money
A qualified dividend is taxed at the long-term capital gains rate. Miss the holding period and the same cash is taxed as ordinary income, at whatever your top rate is. Nothing about the company changed. Only your dates did. That is why a quick in-and-out around the ex-dividend date so often costs more than it collects — the price drops by roughly the dividend on the ex-date anyway, as the stock went ex-dividend and dropped explains.
The part that catches covered call sellers
Write a call on the shares and you are the grantor of an option to buy them. Pub 550 lists that in the days you cannot count. An in-the-money qualified covered call is clearer still: Pub 550 says the stock's holding period does not include the period you are the writer. For a call struck above the share price, I could not find IRS wording that leaves the clock running, so this checker counts those days out too and tells you it did — ask your preparer before you count them back in. If you sell calls on dividend payers, read qualified dividends and covered calls first. For the whole picture (dates, taxes and where covered calls fit), start with dividend investing explained.
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