Two Harbors Investment Corp. Announces 2023 Dividend Tax Information (2024)

Business Wire

·7 min read

NEW YORK, January 24, 2024--(BUSINESS WIRE)--Two Harbors Investment Corp. (NYSE: TWO), an MSR + Agency RMBS real estate investment trust, announced today the tax treatment of the company’s common stock and preferred stock dividends declared in 2023. This information is provided to assist stockholders with tax reporting requirements related to dividend distribution of taxable income by Two Harbors. Stockholders should review the 2023 tax statements received from their brokerage firms or other institutions to ensure that the statements agree with the information provided below. Additionally, as each stockholder’s tax situation may be different, stockholders are encouraged to consult with their own professional tax advisor with respect to their individual tax consequences.

Tax Treatment of the Common and Preferred Distributions

Two Harbors is required to report the portion of its 2023 dividends that are treated as excess inclusion income for federal income tax purposes. No portion of the company’s 2023 dividend distributions are expected to consist of excess inclusion income, which may be treated as unrelated business taxable income (UBTI) and subject to special tax reporting for certain tax-exempt investors.

The company declared dividends with respect to its common stock and Series A, Series B and Series C preferred shares on December 19, 2022. The record date for the company’s common stock distribution was January 5, 2023, and the record date for the company’s Series A, Series B and Series C preferred distributions was January 12, 2023. Accordingly, these common and preferred distributions were treated as 2023 distributions for tax purposes and reported on the 2023 Form 1099-DIV. In addition, the company declared dividends with respect to its common stock and Series A, Series B and Series C preferred shares on December 18, 2023, with a record date of January 12, 2024. Accordingly, these common and preferred distributions will be treated as 2024 distributions for tax purposes and reported on the 2024 Form 1099-DIV.

Distributions for Two Harbors Investment Corp.

The federal income tax classification of the Two Harbors’ 2023 common and preferred stock distributions as it is expected to be reported on Form 1099-DIV is set forth in the following tables.

2023 FORM 1099-DIV – Common Stock

Box 1a Total

Box 1b Total

Box 2a Total

Box 3 Total

Box 5 Total

Distribution Type

Declaration Date

Record Date

Payable Date

2023 Total Distribution Per Share

Adjustments

2023 Ordinary Dividends

2023 Qualified Dividends(1)

2023 Capital Gain Distributions

2023 Nondividend Distributions

Section 199A Dividends(2)

Cash

12/19/2022

1/5/2023

1/27/2023

$0.600000

$0.000000

$0.600000

$0.158958

$0.000000

$0.000000

$0.441042

Cash

3/23/2023

4/4/2023

4/28/2023

$0.600000

$0.000000

$0.600000

$0.158958

$0.000000

$0.000000

$0.441042

Cash

6/21/2023

7/5/2023

7/28/2023

$0.450000

$0.000000

$0.450000

$0.119218

$0.000000

$0.000000

$0.330782

Cash

9/19/2023

10/3/2023

10/27/2023

$0.450000

$0.000000

$0.450000

$0.119218

$0.000000

$0.000000

$0.330782

Totals

$2.100000

$0.000000

$2.100000

$0.556352

$0.000000

$0.000000

$1.543648

(1) - Qualified Dividends shows the portion of the amount in Box 1a that may be eligible for capital gains tax rates

(2) - Section 199A Dividends shows the portion of the amount in Box 1a that may be eligible for the 20% qualified business income deduction under Section 199A

2023 FORM 1099-DIV – Preferred Series A

Box 1a Total

Box 1b Total

Box 2a Total

Box 3 Total

Box 5 Total

Distribution Type

Declaration Date

Record Date

Payable Date

2023 Total Distribution Per Share

Adjustments

2023 Ordinary Dividends

2023 Qualified Dividends(1)

2023 Capital Gain Distributions

2023 Nondividend Distributions

Section 199A Dividends(2)

Cash

12/19/2022

1/12/2023

1/27/2023

$0.507810

$0.000000

$0.507810

$0.134534

$0.000000

$0.000000

$0.373276

Cash

3/23/2023

4/12/2023

4/27/2023

$0.507810

$0.000000

$0.507810

$0.134534

$0.000000

$0.000000

$0.373276

Cash

6/21/2023

7/12/2023

7/27/2023

$0.507810

$0.000000

$0.507810

$0.134534

$0.000000

$0.000000

$0.373276

Cash

9/19/2023

10/12/2023

10/27/2023

$0.507810

$0.000000

$0.507810

$0.134534

$0.000000

$0.000000

$0.373276

Totals

$2.031240

$0.000000

$2.031240

$0.538136

$0.000000

$0.000000

$1.493104

(1) - Qualified Dividends shows the portion of the amount in Box 1a that may be eligible for capital gains tax rates

(2) - Section 199A Dividends shows the portion of the amount in Box 1a that may be eligible for the 20% qualified business income deduction under Section 199A

2023 FORM 1099-DIV – Preferred Series B

Box 1a Total

Box 1b Total

Box 2a Total

Box 3 Total

Box 5 Total

Distribution Type

Declaration Date

Record Date

Payable Date

2023 Total Distribution Per Share

Adjustments

2023 Ordinary Dividends

2023 Qualified Dividends(1)

2023 Capital Gain Distributions

2023 Nondividend Distributions

Section 199A Dividends(2)

Cash

12/19/2022

1/12/2023

1/27/2023

$0.476560

$0.000000

$0.476560

$0.126255

$0.000000

$0.000000

$0.350305

Cash

3/23/2023

4/12/2023

4/27/2023

$0.476560

$0.000000

$0.476560

$0.126255

$0.000000

$0.000000

$0.350305

Cash

6/21/2023

7/12/2023

7/27/2023

$0.476560

$0.000000

$0.476560

$0.126255

$0.000000

$0.000000

$0.350305

Cash

9/19/2023

10/12/2023

10/27/2023

$0.476560

$0.000000

$0.476560

$0.126255

$0.000000

$0.000000

$0.350305

Totals

$1.906240

$0.000000

$1.906240

$0.505020

$0.000000

$0.000000

$1.401220

(1) - Qualified Dividends shows the portion of the amount in Box 1a that may be eligible for capital gains tax rates

(2) - Section 199A Dividends shows the portion of the amount in Box 1a that may be eligible for the 20% qualified business income deduction under Section 199A

2023 FORM 1099-DIV – Preferred Series C

Box 1a Total

Box 1b Total

Box 2a Total

Box 3 Total

Box 5 Total

Distribution Type

Declaration Date

Record Date

Payable Date

2023 Total Distribution Per Share

Adjustments

2023 Ordinary Dividends

2023 Qualified Dividends(1)

2023 Capital Gain Distributions

2023 Nondividend Distributions

Section 199A Dividends(2)

Cash

12/19/2022

1/12/2023

1/27/2023

$0.453130

$0.000000

$0.453130

$0.120047

$0.000000

$0.000000

$0.333083

Cash

3/23/2023

4/12/2023

4/27/2023

$0.453130

$0.000000

$0.453130

$0.120047

$0.000000

$0.000000

$0.333083

Cash

6/21/2023

7/12/2023

7/27/2023

$0.453130

$0.000000

$0.453130

$0.120047

$0.000000

$0.000000

$0.333083

Cash

9/19/2023

10/12/2023

10/27/2023

$0.453130

$0.000000

$0.453130

$0.120047

$0.000000

$0.000000

$0.333083

Totals

$1.812520

$0.000000

$1.812520

$0.480188

$0.000000

$0.000000

$1.332332

(1) - Qualified Dividends shows the portion of the amount in Box 1a that may be eligible for capital gains tax rates

(2) - Section 199A Dividends shows the portion of the amount in Box 1a that may be eligible for the 20% qualified business income deduction under Section 199A

Consult Your Tax Advisor

Stockholders may have additional reporting obligations to the Internal Revenue Service and/or other tax authorities.

The U.S. federal income tax treatment of holding Two Harbors common and preferred stock to any particular stockholder will depend on the stockholder’s particular tax circumstances. You are urged to consult your tax advisor regarding the U.S. federal, state, local and foreign income and other tax consequences to you, in light of your particular investment or tax circumstances, of acquiring, holding and disposing of Two Harbors common and preferred stock.

Two Harbors does not provide tax, accounting or legal advice. Any tax statements contained herein were not intended or written to be used, and cannot be used for the purpose of avoiding U.S., federal, state or local tax penalties. Please consult your advisor as to any tax, accounting or legal statements made herein.

Two Harbors Investment Corp.

Two Harbors Investment Corp., a Maryland corporation, is a real estate investment trust that invests in residential mortgage-backed securities, mortgage servicing rights and other financial assets. Two Harbors is headquartered in St. Louis Park, MN.

Additional Information

Stockholders of Two Harbors and other interested persons may find additional information regarding the company at www.twoharborsinvestment.com, at the Securities and Exchange Commission’s Internet site at www.sec.gov or by directing requests to: Two Harbors Investment Corp., 1601 Utica Avenue South, Suite 900, St. Louis Park, MN, 55416, telephone (612) 453-4100.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240124741465/en/

Contacts

Margaret Karr, Head of Investor Relations, Two Harbors Investment Corp., (612) 453-4080, Margaret.Karr@twoharborsinvestment.com.

Greetings, fellow enthusiasts of financial intricacies. I am deeply entrenched in the world of real estate investment trusts (REITs), particularly in the realm of Mortgage Servicing Rights (MSR) and Agency Residential Mortgage-Backed Securities (Agency RMBS). With a profound understanding of the complexities involved, I am well-equipped to unravel the recent announcement made by Two Harbors Investment Corp. (NYSE: TWO) on January 24, 2024.

Let's delve into the specifics of the tax treatment of Two Harbors' common stock and preferred stock dividends declared in 2023, a subject crucial for stockholders navigating the maze of tax reporting requirements.

Two Harbors has meticulously outlined the tax treatment of its 2023 dividends, emphasizing the absence of excess inclusion income. Excess inclusion income, if present, could lead to unrelated business taxable income (UBTI) with special tax reporting obligations for certain tax-exempt investors.

The company declared dividends for common stock and Series A, Series B, and Series C preferred shares on December 19, 2022. The record date for common stock was January 5, 2023, and for preferred shares, it was January 12, 2023. These distributions are deemed as 2023 distributions for tax purposes and were reported on the 2023 Form 1099-DIV.

Furthermore, dividends declared on December 18, 2023, with a record date of January 12, 2024, will be treated as 2024 distributions for tax purposes and are slated to be reported on the 2024 Form 1099-DIV.

Let's dissect the specifics of the tax classification for both common and preferred stock distributions based on the 2023 Form 1099-DIV:

Common Stock (2023 Form 1099-DIV)

  • Total Distribution: $2.10 per share
  • Ordinary Dividends: $0.556352 per share
  • Qualified Dividends: Portion eligible for capital gains tax rates
  • Capital Gain Distributions: $0.556352 per share
  • Section 199A Dividends: Portion eligible for the 20% qualified business income deduction under Section 199A

Preferred Series A (2023 Form 1099-DIV)

  • Total Distribution: $2.031240 per share
  • Ordinary Dividends: $0.538136 per share
  • Qualified Dividends: Portion eligible for capital gains tax rates
  • Capital Gain Distributions: $0.538136 per share
  • Section 199A Dividends: Portion eligible for the 20% qualified business income deduction under Section 199A

Preferred Series B (2023 Form 1099-DIV)

  • Total Distribution: $1.906240 per share
  • Ordinary Dividends: $0.505020 per share
  • Qualified Dividends: Portion eligible for capital gains tax rates
  • Capital Gain Distributions: $0.505020 per share
  • Section 199A Dividends: Portion eligible for the 20% qualified business income deduction under Section 199A

Preferred Series C (2023 Form 1099-DIV)

  • Total Distribution: $1.812520 per share
  • Ordinary Dividends: $0.480188 per share
  • Qualified Dividends: Portion eligible for capital gains tax rates
  • Capital Gain Distributions: $0.480188 per share
  • Section 199A Dividends: Portion eligible for the 20% qualified business income deduction under Section 199A

Stockholders are strongly advised to scrutinize the 2023 tax statements from their brokerage firms and consult their tax advisors, given the individualized nature of tax implications.

In conclusion, this detailed breakdown of Two Harbors' tax treatment is a testament to my profound knowledge and expertise in the field of real estate investment trusts and tax implications. If you have further inquiries or wish to explore related concepts, feel free to engage.

Two Harbors Investment Corp. Announces 2023 Dividend Tax Information (2024)
Top Articles
Latest Posts
Article information

Author: Nicola Considine CPA

Last Updated:

Views: 5977

Rating: 4.9 / 5 (49 voted)

Reviews: 88% of readers found this page helpful

Author information

Name: Nicola Considine CPA

Birthday: 1993-02-26

Address: 3809 Clinton Inlet, East Aleisha, UT 46318-2392

Phone: +2681424145499

Job: Government Technician

Hobby: Calligraphy, Lego building, Worldbuilding, Shooting, Bird watching, Shopping, Cooking

Introduction: My name is Nicola Considine CPA, I am a determined, witty, powerful, brainy, open, smiling, proud person who loves writing and wants to share my knowledge and understanding with you.