Know About Form 1099-DIV, Dividends and Distributions

The IRS tax Form 1099- DIV will be used by the banks and other financial institutions to report their dividends and other distributions to the IRS and the taxpayers. The investors can receive multiple 1099- DIV Forms and should report all of them to the IRS. 

About Form 1099-DIV, Dividends and Distributions

Who receives Form 1099- DIV?

The common reason for receiving Form 1099- DIV is that some of the stocks that we own pay dividends. Sometimes, the mutual fund investments will pay dividends. It is thus important to report this information along with the tax return with the IRS. Some investment accounts are however exempt from issuing Form 1099- DIV. These exempt accounts include individual retirement accounts, profit-sharing plans, money purchase pension plans, and different retirement accounts.

Investors will not receive Form 1099-DIV if their cumulative dividends are not greater than $10. Taxpayers will include every single piece of information given on this Form either on Schedule B or directly on Form 1040, meant for individual tax returns. 

Who should file Form 1099- DIV?

Banks, investment companies, and other financial institutions are required to send this IRS Form to the taxpayers by January 31st of the tax year. The companies will send copy A of the Form to their investors and send Copy B to the IRS. Most of the investors who receive Form 1099- DIV will have either ordinary dividends, qualified dividends, or total capital gains. Taxpayers who receive more than $1500 as taxable interest or as interest during the tax year should file the information in Schedule B of the IRS Form 1040. 

Dividends will generally be taxed at the rate of the investor’s income tax with a few exceptions. Qualified dividends that have met certain criteria are allowed to be taxed at a lower tax rate. Taxes on long-term capital gains are generally lower than the short-term capital gains. 

How to fill Form 1099- DIV?

The Form will include the name, address, and SSN of the recipient. It also has the payee’s name, address, and plan number. The Form also has a number of Boxes, each reporting a specific information.

  • Box 1 of the Form will report the total amount of ordinary dividends that the taxpayer receives.
  • Box 1b reports qualified dividends
  • Box 2a will report mutual fund investment that creates a capital distribution for the taxpayer.
  • Box 4 will report all state and federal taxes that were withheld from the distributions.

Box 4 will correspond to federal withholding and Box 14 refers to state withholding.

Form 1099- DIV is a common IRS Form that is a record that an entity (other than your employer) paid you money. These payments are generally dividends and interest payments from investment. Simply receiving the 1099- DIV tax Form doesn’t mean that the person owes taxes on the money, but it is expected to be reported to the IRS as these are also a type of income earned. The best way to file them within the deadline and by avoiding penalties is to e-file them through a credible tax filing service provider like Tax2efile.