What is Form 1099-DIV?
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.
How to fill out Form 1099-DIV?
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.