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Form 1099-DIV, Dividends and Distributions, is sent to you by financial institutions when your stocks with them paid dividends or your mutual funds’ investment made capital gains distributions. It determines whether the dividends or distributions gained should be counted under tax return or not. While Form 1099-DIV is not to be submitted to the Internal Revenue Service, it is beneficial when filing tax returns.
Form 1099-DIV has several copies. Each copy is for a different recipient. Take note that only Copy A is printed in red ink which could be generated through scanning and is not necessary to be printed out unless required. It is used for informational purposes only. The other copies are all in black ink. Below are the copies of Form 1099-DIV and their recipients:
- Copy A - The payer submits Copy A to the Internal Revenue Service.
- Copy 1 - The payer submits Copy 1 to your state tax department.
- Copy B - The payer submits Copy B to you for your personal records.
- Copy 2 - The payer submits Copy 2 to you to file with your state income tax return when required.
- Copy C - The payer keeps Copy C.
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Form 1099-DIV contains boxes wherein certain and correct information is required to be entered.
Payer’s name, street address, city or town, state or province, country, ZIP or foreign postal code, and telephone no. The first information seen on Form 1099-DIV are the name, address and contact number of the financial institution that sent you the form.
Payer’s TIN. This section shows the Taxpayer’s Identification Number (TIN) of the payer.
Recipient’s name. This shows your name as the recipient of Form 1099-DIV.
Recipient’s taxpayer identification number (TIN). For privacy, the form may show only the last four digits of your TIN, which could be any of the following: Social Security Number (SSN), Individual Taxpayer’s Identification Number (ITIN), Adoption Taxpayer’s Identification Number (ATIN), or Employer Identification Number (EIN). Regardless, the issuer sends the complete number to the IRS.
FATCA filing requirement. FATCA or Foreign Account Tax Compliance Act is a tax law that requires U.S. citizens both in the U.S and abroad to file annual reports on any foreign account holdings. If the FATCA filing requirement box is marked, you are then required to file an account report.
Account Number. This shows only an account or several unique numbers that the payer assigned to distinguish your account.
Box 1a - Total ordinary dividends. This shows the total ordinary dividends that are your shares in the company which are taxable as ordinary income. You may enter this shown amount on the ‘ordinary dividends’ line of Form 1040, U.S. Individual Income Tax Return.
Box 1b - Qualified dividends. This shows the qualified funds from the amount indicated in Box 1a for reduced capital gain rates. It could also be dividends a corporation has paid to you as a participant. You may also include this as a dividend on your Form 1040.
Box 2a - Total capital gain distribution. This shows the total capital gain distributions, that are your shares of the proceeds of a fund’s sale of stocks or assets. If no amount is shown in Boxes 2b to 2f and your capital gain contributions are also your gains and losses, these amounts could be reported as well on your Form 1040.
Box 2b - Unrecaptured Sec. 1250 gain. This shows a part of the amount in Box 2a that is a portion of a gain to be recapture that is related to previously used depreciation allowances.
Box 2c - Section 1202 gain. This section shows a portion of the amount in Box 2a that is to be partially excluded for gain from certain small business stocks.
Box 2d - Collectibles (28%) gain. This shows a portion of the amount in Box 2a that is sold as a gain and is considered as an alternative investment.
Box 2e - Section 897 ordinary dividends. This section shows the portion of the amount in Box 1a that is Section 897 gain or any distribution by any qualified investment to be treated as gain related to the disposition of U.S. Real Property Interest (USRPI).
Box 2f - Section 897 capital gain. This section shows the portion of the amount in Box 2a that is Section 897 gain attributable to disposition of USRPI.
Box 3 - Nondividend distributions. This shows the non-dividend amount and a return of capital. Taxes do not apply to this kind of distribution. However, any basis excess amount received is taxable as a capital gain.
Box 4 - Federal income tax withheld. This shows backup withholding. A payer is required to backup withhold if you did not provide them your TIN information. You may include this amount on your income tax return as tax withheld.
Box 5 - Section 199A dividends. This shows the portion of the amount in Box 1a that could be considered in the 20% qualified business income deduction.
Box 6 - Investment expenses . This shows your share of expenses of a non publicly offered mutual fund. This amount is also included in box 1a.
Box 7 - Foreign tax paid. This shows the foreign tax that is claimable as a deduction or a credit on Form 1040.
Box 8 - Foreign country or U.S. possession. This part should be left empty if a Regulated Investment Company (RIC) already reported the foreign tax that is shown in Box 7.
Boxes 9 and 10 - Cash and Non-Cash liquidation distributions. This shows the amount of capital to be returned if the organization is fully liquidated.
Box 11 - Exempt-interest dividends. This shows exempt-interest dividends from a mutual fund or any RIC you received during the calendar year. This amount may be subject to backup withholding and you can refer to Box 4.
Box 12 - Specified private activity bond interest dividends. Shows specified private activity bonds interest dividends and is included in Box 11.
Boxes 13–15 State, State identification no. and, State tax withheld. Show income tax withheld information.
Form 1099-DIV includes amounts belonging to another person, and is sent to you when you are considered a nominee recipient of the information written on it. A taxpayer must submit a Form 1099-DIV together with a Form 1096, Annual Summary and Transmittal of U.S. Information Returns, to the IRS for each of the other owners to show their share of the income.
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Do I need to file Form 1099-DIV?
Generally, you must file Form 1099-DIV if you own regulated investment company (RIC) or real estate investment trust (REIT) stock and your total annual dividend income is $10 or more. You may also need to file Form 1099-DIV to report ordinary dividends if the total amount is $600 or above.
Specifically, you need to file Form 1099-DIV if you have:
- paid dividends, including capital gain dividends and exempt-interest dividends, and other distributions valued at $10 or more in money or other property;
- withheld and paid any foreign tax on dividends and other distributions on stock;
- withheld any federal income tax on dividends under the backup withholding rules; or
- paid $600 or more in money or other property as part of a liquidation.
When should I receive Form 1099-DIV?
Form 1099-DIV is sent to taxpayers or payees by January 31.
What do I need to submit with Form 1099-DIV to the IRS?
Filers must send Form 1096, Annual Summary and Transmittal of U.S. Information Returns, with Form 1099-DIV to the Internal Revenue Service by February 28.
Form 1096 is a transmittal form required by the Internal Revenue Service when filing paper forms. Form 1096 and Form 1099-DIV must be mailed in a single flat mailing envelope.
Filers or payers who file electronic Form 1099-DIV with the Internal Revenue Service may not file Form 1096.
Where do I send my Form 1099-DIV?
You may send Form 1099-DIV with Form 1096 to the appropriate mailing address below.
Use the mailing address below if your principal business, office or agency, or legal residence is in Alabama, Arizona, Arkansas, Delaware, Florida, Georgia, Kentucky, Maine, Massachusetts, Mississippi, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Texas, Vermont, or Virginia:
Internal Revenue Service
Austin Submission Processing Center
P.O. Box 149213
Austin, TX 78714
Use the mailing address below if your principal business, office or agency, or legal residence is in Alaska, Colorado, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, North Dakota, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Utah, Washington, Wisconsin, or Wyoming:
Department of the Treasury
IRS Submission Processing Center
P.O. Box 219256
Kansas City, MO 64121-9256
Use the mailing address below if your principal business, office or agency, or legal residence is in California, Connecticut, District of Columbia, Louisiana, Maryland, Pennsylvania, Rhode Island, or West Virginia:
Department of the Treasury
IRS Submission Processing Center
1973 North Rulon White Blvd.
Ogden, UT 84201
What happens if I don't get Form 1099-DIV?
Regardless if you receive Form 1099-DIV or not, you are still required to report your taxable dividend income in your tax return.
Although you will need the information or amount indicated on your Form 1099-DIV, you still need to report your taxable dividend income to the Internal Revenue Service if you did not receive Form 1099-DIV. You may use Schedule B (Form 1040), Interest and Ordinary Dividends, if you had over $1,500 of taxable interest or ordinary dividends.
Schedule B (Form 1040) is a tax return used to report interests, ordinary dividends, and other investment income.
What are the exemptions when filing Form 1099-DIV?
According to the Internal Revenue Service, you may not report the following on Form 1099-DIV:
- Taxable dividend distributions from life insurance contracts and employee stock ownership plans — You may report them on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
- Substitute payments in place of dividends — Brokers who receive payments on behalf of a customer in place of dividends as a result of a loan of a customer's securities must see the instructions for box 8 in Form 1099-MISC, Miscellaneous Income, and Form 1099-NEC, Nonemployee Compensation, instructions.
- Payments made to certain payees — Payees include a corporation, tax-exempt organization, any individual retirement account (IRA), Archer medical savings account (MSA), health savings account (HSA), United States agency, state, the District of Columbia, U.S. possession, or registered securities or commodities dealer.
- Certain dividends — Certain dividends that are actually interest include distributions on deposit or share accounts in cooperative banks, credit unions, domestic building and loan associations, domestic and federal savings and loan associations, and mutual savings banks Form 1099-INT, Interest Income.
What is a capital gain distribution?
A capital gain distribution is an amount paid to you as a shareholder that represents your share of a mutual fund or real estate investment trust's realized net long-term capital gain.
The Internal Revenue Service classifies capital gain distributions as short-term or long-term, depending on how long the security was held by the mutual fund or exchange-traded fund.
What is a short-term capital gain distribution?
A short-term capital gain distribution is a capital gain distribution paid to you on securities you held for one year or less. The Internal Revenue Service will tax short-term capital gains as ordinary income.
What is a long-term capital gain distribution?
A long-term capital gain distribution is a capital gain distribution paid to you on securities you held for more than one year. The Internal Revenue Service will tax long-term capital gains at a maximum rate of 20%, depending on your overall taxable income.
What are dividends?
Dividends are distributions of property made by a corporation to its shareholders, members, or owners. They are classified as either ordinary or qualified.
Ordinary dividends are those amounts the corporation chooses to distribute as a return on its investment and a source of funds for operations.
Qualified dividends are those that meet specific requirements from both the federal income tax law and Internal Revenue Service's publicly announced policy positions. They receive treatment more beneficial than ordinary dividends but less beneficial than capital gain distributions.
What are qualified dividends?
Qualified dividends are taxable dividend distributions made to shareholders who meet the following requirements:
- The shareholder must have held directly or indirectly the stock for more than 60 days during the 121-day period that begins and ends on the date, which is 60 days before the ex-dividend date.
- The shareholder must receive Form 1099-DIV or Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, showing the dividend in box 1a.
Form 1099-DIV includes your share of qualified dividends paid by an investment company registered under the Investment Company Act of 1940, even if you do not directly own stock in the company.
Your share of all sales proceeds resulting from trading activities, including stocks, bonds, other securities, commodities futures, and forward contracts or foreign currency, will reflect on your Form 1099-B.
In general, qualified dividends are the ordinary dividends subject to the same tax rate that applies to net capital gains. Dividends are also qualified if they are dividends paid during the tax year from domestic corporations and qualified foreign corporations.
What is a qualified foreign corporation?
A qualified foreign corporation is a foreign corporation whose stock was readily tradable on an established securities market in the United States at any time during the taxable year.
What is the Investment Company Act of 1940?
The Investment Company Act of 1940 is a federal law that regulates the organization and operations of companies offering investment management services to the public, including mutual funds.
What are nonqualified dividends?
The following dividends are not qualified dividends as stated by the Internal Revenue Service:
- Dividends you receive on any share of stock held for less than 61 days during the 121-day period that began 60 days before the ex-dividend date
- Dividends attributable to periods totaling more than 366 days that you received on any share of preferred stock held for less than 91 days during the 181-day period that began 90 days before the ex-dividend date
- Dividends that relate to payments that you are obligated to make with respect to short sales or positions in substantially similar or related property
- Dividends paid by a regulated investment company (RIC) that are not treated as qualified dividend income under section 854
- Dividends paid by a real estate investment trust (REIT) that are not treated as qualified dividend income under section 857(c)
- Deductible dividends paid on employer securities
What is Form 1099-B?
When you sell stocks or bonds, your broker should send Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, to report the sale. It shows the sales amount in box 1a and the taxable proceeds in box 2.
Form 1099-B reports your share of all sales proceeds resulting from trading activities, including stocks, bonds, other securities, commodities futures, forward contracts, or foreign currency.
Do I need to file the Form 1099-DIV I received from my broker to the IRS?
No. Form 1099-DIV does not need to be sent to the Internal Revenue Service or attached to your tax return. Form 1099-DIV is provided for informational purposes only and must be kept with your records in case there is ever any question about the amount of dividends you received in a given year.
In other words, Form 1099-DIV is used to help you prepare your tax return and is not filed with your tax return. Your broker must provide Form 1099-DIV to you by January 31 of the year following the calendar year that Form 1099-DIV reflects.
Copy A of Form 1099-DIV and a transmittal form are due to the Internal Revenue Service by February 28.
Is Form 1099-B the same as Form 1099-DIV?
No. Form 1099-B is used to report proceeds from the sale of stock, bonds, mutual funds, and other securities. It is provided to you by your broker as a sales record.
Form 1099-DIV, on the other hand, reports dividends paid during the year to you as an owner of one or more investments.
Does Form 1099-DIV include my share of the partnership's ordinary income?
If you own a partnership interest at any time during the tax year, your allocable share of the partnership’s ordinary income that is not effectively connected with a U.S. trade or business must be reported to you on Form 1099-DIV even if the partnership does not distribute any cash to you.
Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc., also lists your share of the partnership's ordinary income, deductions, credits, or other tax items for purposes of reporting this information to you and the Internal Revenue Service.
Do I have to report dividends less than $10?
No, but you are still required to report all of your dividend income regardless of the amount to the Internal Revenue Service.
Form 1099-DIV must be issued by payers if you own one or more investments that paid dividends of $10 or more during the year.
What is the minimum amount of dividends earned to receive Form 1099-DIV? Form
Form 1099-DIV must be issued for any dividends your investments paid of $10 or more.
If you own one or more investments that pay dividends, you will also receive Form 1099-DIV.
Do dividends count as income?
Yes, dividends count as income, whether they are qualified or nonqualified.
Dividends are income paid to you by a corporation or mutual fund. You declare your dividend income on Form 1040, U.S. Individual Income Tax Return, using the information reported on your Form 1099-DIV.
Although dividends are considered income, the Internal Revenue Service taxes them as capital gains, not income.
Can I avoid paying tax on dividends if I reinvest them?
You cannot avoid paying taxes on dividends if you reinvest your dividends in more shares of the company that paid them. It is because the Internal Revenue Service will still consider income earned based on your taxable dividends, even if you reinvest it to buy more stock.
You must report all dividend income received throughout the year to the Internal Revenue Service regardless of whether or not you use it to purchase more investments.
Can Form 1099-DIV be electronically filed?
Yes. Form 1099-DIV can be filed electronically with the Internal Revenue Service, but only if you have an approved Form 4419, Application for Filing Information Returns Electronically (FIRE).
Form 4419 is a form used to request a Transmitter Control Code (TCC), a tax information code used to identify payers who are permitted or required to file returns electronically.
Once you have a TCC, you can file Form 1099-DIV and all other information returns without Form 1096. Remember that you must electronically file if you need to file 250 or more returns.
How do I file Form 1099-DIV electronically?
To file Form 1099-DIV and other electronic returns, you may use the Filing Information Returns Electronically (FIRE) System of the Internal Revenue Service( IRS).
The FIRE System is a service provided by the IRS that allows filers to file Form 1099-DIV and other information returns electronically.
Form 1099-DIV does not have to be sent in with Form 1096 if filing through the FIRE System.
What do I do with Form 1099-DIV?
If you received Form 1099-DIV, you must use it to determine the amount you need to enter on your tax returns. Form 1099-DIV is sent to you by the institution that paid the dividends to report your share of ordinary dividends, qualified dividends, and all other dividend income.
Do I need to file Form 1099-DIV with the state?
No. Form 1099-DIV is a federal form, as it only includes information needed by the Internal Revenue Service for processing and identification of tax returns. However, the state tax authority where you reside may require its own Form 1099-DIV to be issued. It usually happens if your local state participates in the Combined Federal/State Filing (CF/SF) Program.
Most likely, Form 1099-DIV, and the following returns, may be filed electronically under the CF/SF Program:
- Form 1099-B
- Form 1099-G, Certain Government Payments
- Form 1099-INT
- Form 1099-K, Payment Card and Third Party NetworkTransactions
- Form 1099-MISC
- Form 1099-OID, Original Issue Discount
- Form 1099-PATR, Taxable Distributions Received FromCooperatives
- Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
- Form 5498, IRA Contribution Information
What is the Combined Federal/State Filing (CF/SF) Program?
The Combined Federal/State Filing (CF/SF) Program is the electronic filing program that allows filers to send Form 1099-DIV and other information returns directly to participating state tax agencies at the same time they are filed with the IRS.
What states participate in the Combined Federal/State Filing (CF/SF) Program?
Here is the current list of states participating in the Combined Federal/State Filing (CF/SF) Program of the Internal Revenue Service:
- New Jersey
- New Mexico
- North Carolina
- North Dakota
- South Carolina
If Form 1099-DIV is not required by the state, should I still file Form 1099-DIV with the state?
Lately, many states have enacted legislation requiring electronic filing of the 1099 forms. However, if the state where you reside does not require you to file Form 1099-DIV, you may not need to file it.
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