Posted by Carmen Garcia

All About IRS Form 1099 - DIV: Dividends and Reporting

All About IRS Form 1099 - DIV: Dividends and Reporting

All investors and shareholders that get dividends and distribution will have the dividend reported on IRS Form 1099. Examples of dividends reflected on the 1099 DIV form are capital gains dividends, dividends paid out, and exempt-interest dividends. With this form, the entire amount the bank pays the shareholder for the business duration can be revealed. 

This form also helps report other tax items that have to do with dividends and distributions like investment expenses, section 1202 gain, foreign tax paid section 1250 gain, and federal tax withheld.


Reporting Form 1099 DIV 

In reviewing 1099 DIV, there are several boxes, and some come with a particular value, while others have no value. What you report on each box is unique and determines if you will report it on your tax return or not. 


Reporting Boxes for 1099-DIV

Box 1a reflects the sum of the ordinary dividends sent to you.

Box 1b shows part of box 1a classified as qualified dividends.

Box 2b houses mutual gain investment that generates a capital gain for shareholders.

Boxes 4 and 14 respectively report the amount withheld by the federal and state from the distribution.


Qualified and Ordinary Dividends 

Shareholders will have to pay taxes for ordinary dividends that do not qualify. You can estimate this value by removing box 1b from 1a. 

Uncle Sam's taxes qualified dividends at long-term capital gains rate. This means you will get tax-free dividends provided your income tax credit is 15% at the highest level. For a marginal tax rate of over 15%, the qualified dividends are taxed at 20 or 15%, whichever corresponds to your income. The following factors are necessary to be qualified:

  • the dividends must come from a U.S. corporation

  • For an international corporation, there must be a tax treaty between the incorporation country and the U.S.


Mutual Fund Distributions

If you have a distribution on your mutual fund investment earnings, Uncle Sam will let you treat it like a lifelong capital gain if it was reported to you. This is a good idea as similar rules apply to qualified dividends and mutual funds, capital gain distributions no matter how long you hold the investment. 


Section B implications

Getting dividends this year might mean that you will make available a Schedule B and attach it to your tax return. You need to report your entire taxable dividend income even if you do not get a Form 1099 DIV. 

You need schedule B if the entire amount of dividends you got is more than $1,500. Schedule B, however, does not affect your tax amount. Its primary role is to help you report info on interests and dividends you got and the sources.


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