If you’re an investor or shareholder, chances are you receive dividends or distributions. And if that’s the case, you need a record from the company detailing exactly what you’ve earned. That’s where Form 1099-DIV, an IRS tax document, comes in handy.
But how do you make sense of IRS Form 1099-DIV, and how do you use the data to complete your own tax return correctly? In this article, our experienced tax attorneys explain what you need to know.
What Is IRS Form 1099-DIV?
Let’s start with the basic question—what is Form 1099-DIV from the IRS? Put simply, IRS Form 1099-DIV, Dividends and Distributions, is a type of tax form. It’s issued when a company, such as a brokerage firm, pays you $10 or more in dividends during the financial year.
Who Receives a 1099-DIV Form?
The IRS cares about all income you receive—not just income from your employer. So, you will receive this form if you earn dividend payments, or distributions, from a company, brokerage firm, or financial institution.
There are times when you won’t receive a Form 1099-DIV, even if you earned a small amount of dividend income. We’ll cover these exceptions below. Even if you don’t receive the form, though, be aware that it’s your responsibility to report all taxable income to the IRS.
Who Files IRS Form 1099-DIV?
1099-DIV is filed by banks, brokerage firms, and other financial institutions—one copy is sent to the payee, and one copy is sent to the IRS.
Parts of IRS Form 1099-DIV
Although Form 1099-DIV appears complex at first glance, it’s not as daunting as it seems. Let’s break down the main parts of the form below.
1. Payer’s Details
The first few sections include the payer’s details. This will be the details for whichever bank, institution, or company is paying you the dividends or distributions. The details include their name, address, and Tax Identification Number (TIN).
2. Recipient’s Details
Your details, including your name, street address, and TIN, are included on the form. Check that these are accurate to ensure there are no delays or issues completing your tax return.
3. Dividends
All dividends, including ordinary dividends and qualified dividends, are recorded on the Form 1099-DIV.
- Ordinary dividends, or standard dividends, are taxed at your usual tax rate.
- Qualified dividends are taxed at a lower tax rate, depending on your circumstances.
4. Distributions
Distributions, including capital gains and nondividend distributions, are included on this form as well.
- Capital gains distributions are capital gains received from a mutual fund, ETF, or REIT (real estate investment trust).
- Nondividend distributions such as stock splits aren’t taxable, but they can impact the overall cost basis, or purchase price, of an investment. As such, they’re recorded on the 1099-DIV form.
5. Other Taxes and Expenses
Other taxes, such as federal tax withheld by your broker, are included in the relevant boxes.
Don’t worry if any boxes are blank. This is normal! But do query any missing figures if you think something should be recorded which is not there.
How to Report Dividends on Your Tax Return
How do you report dividend income? It depends on the total amount of dividends and/or interest received.
- Dividends and/or interest less than $1,500: You can simply report your dividend and distribution income on Form 1040, which is the primary form used to complete a personal income tax return.
- Dividends and/or interest exceeding $1,500: You may also be required to complete a Schedule B form alongside your Form 1040 to provide more detail about your earnings.
Not sure which form to complete or how to proceed? Don’t risk making avoidable errors. Contact Gordon Law to discuss how to prepare your personal or business taxes.
Are All Dividends Taxable?
Just because a dividend is listed on your Form 1099-DIV does not mean you’ll pay taxes on the income. You may have a deduction or tax break, for example, that allows you to offset at least part of the income.
It can be difficult to know whether dividend income is taxable. To avoid incurring tax debt or IRS tax penalties, discuss your tax return with the Gordon Law team.
What if I Don’t Receive IRS Form 1099-DIV?
You won’t always receive this form. If, for example, you receive a distribution worth less than $10 from an institution, there’s no tax form generated. Additionally, certain types of accounts are exempt from the reporting requirement. These accounts include:
- Tax-deferred retirement accounts
- IRAs
- Charities
- Certain types of trusts
- Accounts owned by nonresident aliens (they have separate filing requirements)
If you don’t receive Form 1099-DIV but think you should, contact the relevant organization for advice. If you’re still unsure and you’re worried about completing your tax return, our team is happy to help.
Got Tax Questions? Contact Gordon Law Today!
As with all IRS tax forms, Form-1099 DIV can be tricky to understand. If you’re concerned about how to use the data to complete your personal tax return, don’t worry any longer. Instead, contact the Gordon Law team.
As experienced tax attorneys, we can help you file your tax returns accurately, saving time, money, and stress. Contact us now by phone or online to schedule your free initial meeting with our tax lawyers. Get the tax support you deserve today!
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