Very Basic Questions

[shadowmoss]

I have a couple of very basic investing questions.  I will investigate more deeply when I have money to invest, currently poised to be end of the year when I pay off the rest of the consumer debt.

1.  What is the time reference between 'short' and 'long'.  I know that the tax rates change when an investment moves from short to long.

2.  If dividends are reinvested do they accrue a current tax liability, or do they just add in to the base?  This would be in a regular taxable account.

I plan on studying a lot more before jumping into (again) investing.  Right now all money is going to debt repayment, but next year will be the year I start. 

[grantmeaname]

1. For capital gains tax, the dividing window between short and long is a year. Is that what you're referring to?

2. Dividends are taxed as earned income even if they're reinvested. Edit: until the end of the year qualified dividends are taxed like long-term capital gains. Starting 1/1/13, they're taxed like earned income again.

[shadowmoss]

Thank you, yes, that is what I wanted to know.  At one time a long time ago I was a member of an investing club.  I'd forgotten the basics, though.  When I get ready to invest again I'll join over at BetterInvesting.org again and go through their investing class again.