Form 1099-DIV, Dividends and Distributions, is an Internal Revenue Service (IRS) form sent by banks and other financial institutions to investors who have received dividends and distributions from any type of investment during a tax year. These typically include ordinary and qualified dividends, federal income tax withheld total capital gains and foreign tax paid.
Investors can receive multiple 1099-DIVs from banks and financial institutions. They must report every form while filing their taxes. An investor may not receive a form if their cumulative dividends are less than $10.1. Dividends, taxed at an investor’s income tax rate, have few exceptions including qualified dividends.
What is Form 1099-DIV?
A 1099-DIV tax form serves as a record that a company or other financial entity paid dividends to investors. An investor can receive this form from banks and financial institutions if they earned more than $10 in dividends on their investments.
The form will contain your Social Security Number or taxpayer identification number on it, indicating that the IRS will know you’ve received dividends. As a result, it becomes highly crucial to fill out the form and report that income on your tax return. If you receive Form 1099-DIV and don’t report the dividends on your tax return, the IRS will know and likely send you a CP2000 – Underreported Income notice. According to this IRS notice, you may have to pay additional tax, penalties and/or interest on your dividends and any other unreported income.
Who Can File the Form?
Banks, investment companies and other financial institutions send a copy of the form to the investor and to the IRS by February. The form includes the name of the recipient (investor/taxpayer), address and Social Security Number (SSN) among other details.
On the right side, the form also outlines important figures the recipient needs. This includes qualified dividends, total ordinary dividends and total capital gain distribution. Those receiving the Form 1099-DIV will have had ordinary dividends, qualified dividends or total capital gains.
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What to Do if I Receive a 1099-Div Tax Form?
Through the IRS Form 1099-DIV, you will learn how much income you received during the year. You need to report the entire income across different sections on your return, depending on the kind of income you earned.
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How to File Form 1099-DIV?
Form 1099-DIV contains three copies. Copy A (in red) is for informational purposes only and need not be printed. Copy B contains two parts, which can be downloaded and printed. One is for the recipient, while the other is for the state tax department.
A taxpayer needs to fill in all necessary information on each copy. It can be done on a Schedule B form or directly on Form 1040. For instance, taxpayers who receive over $1,500 in taxable interest and/or ordinary dividends during the financial year must fill out Schedule B, along with a 1040 form.
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What Should I Do if I Didn’t Receive the Form Even Though I Was Paid Dividends?
A taxpayer can receive a Form 1099-DIV only if they received dividends exceeding $10. If your dividend payments were over $10 and you still haven’t received a form, contact your issuer.
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Exceptions
A taxpayer may not need to report Form 1099-DIV due to the following reasons:
- Taxable dividend distributions from life insurance contracts and employee stock ownership plans. These dividends are on Form 1099-R.
- If you received substitute payments in lieu of dividends.
- Payments were made to certain payees, including the IRA, tax-exempt organizations, Archer MSA and health savings accounts (HSA) among others.
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