Question: If I chose not to DRIP and let the divs collect in my account (I’m using TD), then purchase another stock, would the taxation be any different?

Sue Weed: What will be different is that you will have to pay commissions while dripping is commission free!

Robert Bartlett: You’d be taxed the same.

Nathan Vowell: I don’t drop because it’s harder to figure out capital gain/loss if you sell a stock after dropping for a while.

Lisa Moen Armstrong: This is the same reason I drip in my Roth and not in my taxable account. Besides, since the dividends are taxed the same I would rather have cash each month!

David Martin: Fidelity does it for you. An advantage of a full-service online broker.

Lisa Moen Armstrong: Right, but your cost basis changes based on dividends earned. I keep my own cost basis of the actual money I’ve put in to each stock. Dripping would make that hard to keep track of.

Nathan Vowell: David Martin I will have to check and see if Schwab does this. I just swapped to them recently.

Lisa Moen Armstrong: For instance, my cost basis for AGNC with Fidelity shows as $26,590.70 when my actual cost basis was $28,367.11. Some companies don’t do that, like Apple has stayed the same on my cost basis.

David Martin: For tax purposes, your cost basis changes when you reinvest dividends, yes. For personal accounting purposes, it doesn’t, if you’re trying to measure your gains against initial investment. In other words, you invest money from your pocket only once, t…See more

Lisa Moen Armstrong: I have not reinvested into AGNC. I have received all dividends in cash. I asked Fidelity about the difference in cost basis, and I was told that sometimes cost basis is adjusted based on dividends paid out.

Lisa Moen Armstrong: I think this is why.

Ruben Srs: Lisa Moen Armstrong it seems you dont understand the difference between ROC and dividend

Lisa Moen Armstrong: Yes, I know what a dividend is. What I’m trying to figure out is why the cost basis changes with some companies (my REIT’s, to be exact) and with other dividend paying companies (like Apple) it doesn’t. Any insight would be appreciated! The fidelity re…See more

Ruben Srs: Lisa Moen Armstrong again. LoL.. try to figure out what is the regular dividend and what is the return of capital.. then you will understand why in one case you have your cost basis adjusted and in another case you havent

Ruben Srs: Lisa Moen Armstrong ifnthe payout is ROC then your tax is deffered and cost basis is adjusted

Michael McKinney: Lisa Moen Armstrong some brokerages you have to manually adjust the cost basis on the info page, but usually in the gain/loss page it’s accurate. TDA is like that.

Michael McKinney: I don’t know how anyone that is “actively” investing can keep track of everything without GainsKeeper.

Ruben Srs: Michael McKinney gainskeeper?

Michael McKinney: Yes

Ruben Srs: Michael McKinney who/what is gainskeeper?

Lisa Moen Armstrong: Michael McKinney is this only if you sell? My gains/loss page is for closed positions. The only reason I noticed the difference on the cost basis was because I looked at the actual transaction history and noticed it was a different amount than my purchase history page.

Michael McKinney: Lisa Moen Armstrong If I buy or sell I have to adjust cost basis manually on the positions page (for info only) but not in the gain/loss, realized, unrealized, settled page. What you describe maybe one does not include the commission? OR it doesn’t average out? Not sure which brokerage you use.

Lisa Moen Armstrong: It’s Fidelity. So under purchase history it shows one amount and under the actual transaction history it shows a different amount. It’s not the 4.95 commission, it averaged my cost basis down by 1.77 a share. I think I’ll just call fidelity again and have them explain why it’s different. I know I’m just missing something and it isn’t a big deal, I’m just a numbers geek.

Michael McKinney: are you talking about single purchase amount, i.e. cost per share or proceeds amount? I’m sorta lost. Yes, it’s good to know what your brokerage is doing and where to find info on their site. Let me know what it turns out to be.

Lisa Moen Armstrong: Cost per share.

Michael McKinney: Cost per share for single transaction, order/buy price or cost basis for total shares owned? If it averaged down by $1.77 then it sounds like it’s showing you the cost basis for that position. Still trying to piece together the problem.

Lisa Moen Armstrong: Each transaction (there are 7) has been averaged down so that it’s 1.77 less per share.

Michael McKinney: Total cost of 7, divide by 7 = cost basis. Simple enough. So, it sounds like what you see is the cost at time of buy. 1.77 less than what?

Lisa Moen Armstrong: Here. Take a look. My dates go backwards from theirs.

Michael McKinney: These are all for closed/sell lots?

Michael McKinney: Lisa Moen Armstrong reading some of your other posts. Your cost basis is changing because you’re buying/selling. IF your cost basis is changing between buys/sells, then that is strange and only Fidelity can answer that. I can not think of reason why cost basis would change on a position if there is not activity. Am I reading your question right? Why is my cost basis changing?

Dan Weston: Dividends are taxed when they are paid out (to you), payable with your Form 1040 the following April 15th in the U.S.https://www.thebalance.com/dividends-on-tax-returns-3193086

Diane M Haywood: Dan weston- [email protected]?!? The tax form doesnt come out till april 15th. Holy cow! I just opened my first fidelity….See more

Karl Schmidt: Thanks everyone for the info!

Joudeh Khaled: dripping doesn’t make sense

Robert Bartlett: Why doesn’t it?

Joudeh Khaled: Robert Bartlett it is better to collect the dividends and then invest them in the best stock at the time

Karl Schmidt: that can cost you more $$ tho

Joudeh Khaled: why will it cost more?

Sue Weed: Joudeh Khaled explain yourself.

Robert Bartlett: Best stock meaning best valuation of your dividend payers?

Nathan Vowell: Commission fees with each new purchase.

Joudeh Khaled: Robert Bartlett mostly yes! or just best stock to buy right now! Sue Weed I just did earlier

Karl Schmidt: Because you pay a fee to purchase other stocks while DRIP you don’t….

Joudeh Khaled: Karl Schmidt well, I just pay around 0.5$ per purchase using degiro and $1 using IBK.. this fee is negligible! well, unless you have a very small portfolio

Sue Weed: Joudeh Khaled as a US investor paying $4.95 US per trade I prefer to Drip until a position is the size I want then I redirect into my core for diversified investments.

Joudeh Khaled: Sue Weed not sure why you are paying this fee? why not move to IBK for example? or to Robinhood?

Sue Weed: Joudeh Khaled because I have liked my broker for 40+ years and I can drip fractional shares (Robinhood doesn’t) and prefer not to use foreign on-line brokerages.

Michael Lewis: https://www.change.org/…/robinhood-financial-to-get…

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Michael Freise: Joudeh Khaled sorry, that’s not true. Dripping is like DCA, only free.

Jeremy Gumba Colacchio: M1. Drip and fractional shares. https://mbsy.co/lRjVh

M1 Finance
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Michael McKinney: Jeremy Gumba Colacchio seems like it would take all the fun out of being a self-directed investor.

Jeremy Gumba Colacchio: That’s why I have robinhood as well.

Daniel Eduardo Bidot: Dripping only makes sense if you are a very passive investor

Michael McKinney: Give me the money, I like the choice when and what to buy

Josh Reddinger: Question regarding M1. Will they transfer holdings from another acct for no fee like robinhood does?

Jeremy Gumba Colacchio: Does it cost anything to transfer my account to M1?Although M1 does not charge for incoming account transfers, your previous brokerage may charge an outgoing fee.

Jeremy Gumba Colacchio: https://support.m1finance.com/…/Direct_Account…

Deuel Stephens: Uncle Sam always gets his….. either going in or coming out

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