Foreign
income. If
you are a U.S. citizen with
dividend income from sources
outside the United States
(foreign income), you must
report that income on your tax
return unless it is exempt by
U.S. law. This is true whether
you reside inside or outside the
United States and whether or not
you receive a Form 1099 from the
foreign payer.
Introduction
This chapter discusses the
tax treatment of:
Ordinary dividends,
Capital gain
distributions,
Nondividend
distributions, and
Other distributions
you may receive from a
corporation or a mutual
fund.
This chapter also explains
how to report dividend income on
your tax return.
Dividends are distributions
of money, stock, or other
property paid to you by a
corporation. You also may
receive dividends through a
partnership, an estate, a trust,
or an association that is taxed
as a corporation. However, some
amounts you receive that are
called dividends are actually
interest income. (See
Dividends that are actually
interest under
Taxable Interest in
chapter 8.)
Most distributions are paid
in cash (or check). However,
distributions can consist of
more stock, stock rights, other
property, or services.
Useful Items - You
may want to see:
Publication
514
Foreign Tax Credit for
Individuals
550
Investment Income and
Expenses
564
Mutual Fund
Distributions
Form
(and Instructions)
Schedule B (Form 1040)
Interest and Ordinary
Dividends
Schedule 1 (Form 1040A)
Interest and Ordinary
Dividends for Form 1040A
Filers
General Information
This section discusses
general rules for dividend
income.
Tax on
investment income of a child
under age 14.
Part of a child's 2004
investment income may be
taxed at the parent's tax
rate. This may happen if all
of the following are true.
The child was
under age 14 at the
end of 2004. A child
born on January 1,
1991, is considered
to be age 14 at the
end of 2004.
The child had
more than $1,600 of
investment income
(such as taxable
interest and
dividends) and has
to file a tax
return.
At least one of
the child's parents
was alive at the end
of 2004.
If all of these statements
are true, Form 8615, Tax for
Children Under Age 14 With
Investment Income of More
Than $1,600, must be
completed and attached to
the child's tax return. If
any of these statements is
not true, Form 8615 is not
required and the child's
income is taxed at his or
her own tax rate.
However, the parent can
choose to include the
child's interest and
dividends on the parent's
return if certain
requirements are met. Use
Form 8814, Parents' Election
To Report Child's Interest
and Dividends, for this
purpose.
For more information about
the tax on investment income
of children and the parents'
election, see chapter 33.
Beneficiary
of an estate or trust.Dividends and other
distributions you receive as
a beneficiary of an estate
or trust are generally
taxable income. You should
receive a Schedule K-1 (Form
1041), Beneficiary's Share
of Income, Deductions,
Credits, etc., from the
fiduciary. Your copy of
Schedule K-1 and its
instructions will tell you
where to report the income
on your Form 1040.
Social
security number (SSN).You must give your name
and SSN (or individual
taxpayer identification
number (ITIN)) to any person
required by federal tax law
to make a return, statement,
or other document that
relates to you. This
includes payers of
dividends. If you do not
give your SSN or ITIN to the
payer of dividends, you may
have to pay a penalty.
For more information on SSNs
and ITINs, see
Social security number (SSN)
in chapter 8.
Backup
withholding.
Your dividend income is
generally not subject to
regular withholding.
However, it may be subject
to backup withholding to
ensure that income tax is
collected on the income.
Under backup withholding,
the payer of dividends must
withhold, as income tax, a
percentage of the amount you
are paid. For 2005, this
percentage is 28%.
Backup withholding may
also be required if the
Internal Revenue Service
(IRS) has determined that
you underreported your
interest or dividend income.
For more information, see
Backup Withholding in chapter 5.
Stock
certificate in two or more
names.
If two or more persons
hold stock as joint tenants,
tenants by the entirety, or
tenants in common, each
person may receive a share
of any dividends from the
stock. Each person's share
is determined by local law.
Form
1099-DIV.
Most corporations use Form
1099-DIV, Dividends and
Distributions, to show you
the distributions you
received from them during
the year. Keep this form
with your records. You do
not have to attach it to
your tax return.
Dividends not reported on
Form 1099-DIV.
Even if you do not receive
Form 1099-DIV, you must
still report all of your
taxable dividend income. For
example, you may receive
distributive shares of
dividends from partnerships
or subchapter S
corporations. These
dividends are reported to
you on Schedule K-1 (Form
1065) and Schedule K-1 (Form
1120S).
Reporting tax withheld.
If tax is withheld from
your dividend income, the
payer must give you a Form
1099-DIV that indicates the
amount withheld.
Nominees.
If someone receives
distributions as a nominee
for you, that person will
give you a Form 1099-DIV,
which will show
distributions received on
your behalf.
Form
1099-MISC.
Certain substitute
payments in lieu of
dividends or tax-exempt
interest that are received
by a broker on your behalf
must be reported to you on
Form 1099-MISC,
Miscellaneous Income, or a
similar statement. See
Reporting Substitute
Payments under
Short Sales in
chapter 4 of Publication 550
for more information about
reporting these payments.
Incorrect
amount shown on a Form 1099.
If you receive a Form 1099
that shows an incorrect
amount (or other incorrect
information), you should ask
the issuer for a corrected
form. The new Form 1099 you
receive will be marked “Corrected.”
Dividends
on stock sold.
If stock is sold,
exchanged, or otherwise
disposed of after a dividend
is declared, but before it
is paid, the owner of record
(usually the payee shown on
the dividend check) must
include the dividend in
income.
Dividends
received in January.
If a regulated investment
company (mutual fund) or
real estate investment trust
(REIT) declares a dividend
(including any
exempt-interest dividend or
capital gain distribution)
in October, November, or
December payable to
shareholders of record on a
date in one of those months
but actually pays the
dividend during January of
the next calendar year, you
are considered to have
received the dividend on
December 31. You report the
dividend in the year it was
declared.
Ordinary Dividends
Ordinary (taxable) dividends
are the most common type of
distribution from a corporation.
They are paid out of the
earnings and profits of a
corporation and are ordinary
income to you. This means they
are not capital gains. You can
assume that any dividend you
receive on common or preferred
stock is an ordinary dividend
unless the paying corporation
tells you otherwise. Ordinary
dividends will be shown in box
1a of the Form 1099-DIV you
receive.
Qualified
Dividends
Qualified dividends are
the ordinary dividends that
are subject to the same 5%
or 15% maximum tax rate that
applies to net capital gain.
They should be shown in box
1b of Form 1099-DIV you
receive.
Qualified dividends are
subject to the 15% rate if
the regular tax rate that
would apply is 25% or
higher. If the regular tax
rate that would apply is
lower than 25%, qualified
dividends are subject to the
5% rate.
To qualify for the 5% or
15% maximum rate, all of the
following requirements must
be met.
The dividends
must have been paid
by a U.S.
corporation or a
qualified foreign
corporation. (See
Qualified
foreign corporation
later.)
The dividends
are not of the type
listed later under
Dividends that
are not qualified
dividends.
You meet the
holding period
(discussed next).
Holding
period. You must
have held the stock for
more than 60 days during
the 121-day period that
begins 60 days before
the ex-dividend date.
The ex-dividend date is
the first date following
the declaration of a
dividend on which the
buyer of a stock will
not receive the next
dividend payment.
Instead, the seller will
get the dividend.
When counting the
number of days you held
the stock, include the
day you disposed the
stock, but not the day
you acquired it. See the
examples later.
Exception for preferred
stock. In the
case of preferred stock,
you must have held the
stock more than 90 days
during the 181-day
period that begins 90
days before the
ex-dividend date if the
dividends are
attributable to periods
totaling more than 366
days. If the preferred
dividends are
attributable to periods
totaling less than 367
days, the holding period
in the previous
paragraph applies.
Example 1.
You bought 5,000
shares of XYZ Corp.
common stock on July 1,
2004. XYZ Corp. paid a
cash dividend of 10
cents per share. The
ex-dividend date was
July 9, 2004. Your Form
1099-DIV from XYZ Corp.
shows $500 in box 1a
(ordinary dividends) and
in box 1b (qualified
dividends). However, you
sold the 5,000 shares on
August 4, 2004. You held
your shares of XYZ Corp.
for only 34 days of the
121-day period (from
July 2, 2004, through
August 4, 2004). The
121-day period began on
May 10, 2004 (60 days
before the ex-dividend
date), and ended on
September 7, 2004. You
have no qualified
dividends from XYZ Corp.
because you did not hold
the XYZ stock for more
than 60 days.
Example 2.
Assume the same facts
as in Example 1 except
that you bought the
stock on July 8, 2004
(the day before the
ex-dividend date), and
you sold the stock on
September 9, 2004. You
held the stock for 63
days (from July 9, 2004,
through September 9,
2004). The $500 of
qualified dividends
shown in box 1b of your
Form 1099-DIV are all
qualified dividends
because you held the
stock for 61 days of the
121-day period (from
July 9, 2004, through
September 7, 2004).
Example 3.
You bought 10,000
shares of ABC Mutual
Fund common stock on
July 1, 2004. ABC Mutual
Fund paid a cash
dividend of 10 cents a
share. The ex-dividend
date was July 9, 2004.
The ABC Mutual Fund
advises you that the
portion of the dividend
eligible to be treated
as qualified dividends
equals 2 cents per
share. Your Form
1099-DIV from ABC Mutual
Fund shows total
ordinary dividends of
$1,000 and qualified
dividends of $200.
However, you sold the
10,000 shares on August
4, 2004. You have no
qualified dividends from
ABC Mutual Fund because
you did not hold the ABC
Mutual Fund stock for
more than 60 days.
Holding period reduced
where risk of loss is
diminished.
When determining
whether you met the
minimum holding period
discussed earlier, you
cannot count any day
during which you meet
any of the following
conditions.
You had an
option to sell,
were under a
contractual
obligation to
sell, or had
made (and not
closed) a short
sale of
substantially
identical stock
or securities.
You were
grantor (writer)
of an option to
buy
substantially
identical stock
or securities.
Your risk of
loss is
diminished by
holding one or
more other
positions in
substantially
similar or
related
property.
For information about
how to apply condition
(3), see Regulations
section 1.246-5.
Qualified foreign
corporation. A
foreign corporation is a
qualified foreign
corporation if it meets
any of the following
conditions.
The
corporation is
incorporated in
a U.S.
possession.
The
corporation is
eligible for the
benefits of a
comprehensive
income tax
treaty with the
United States
that the
Treasury
Department
determines is
satisfactory for
this purpose and
that includes an
exchange of
information
program. For a
list of those
treaties, seeTable
9-1.
The
corporation does
not meet (1) or
(2) above, but
the stock for
which the
dividend is paid
is readily
tradable on an
established
securities
market in the
United States.
See
Readily
tradable stock,
later.
Exception. A
corporation is not a
qualified foreign
corporation if it is a
foreign personal holding
company, foreign
investment company, or a
passive foreign
investment company
during its tax year in
which the dividends are
paid or during its
previous tax year.
Readily tradable stock.
Any stock (such as
common, ordinary stock,
or preferred stock) or
an American depositary
receipt in respect of
that stock, is
considered to satisfy
requirement (3) if it is
listed on one of the
following securities
markets: the New York
Stock Exchange, the
NASDAQ Stock Market, the
American Stock Exchange,
the Boston Stock
Exchange, the Cincinnati
Stock Exchange, the
Chicago Stock Exchange,
the Philadelphia Stock
Exchange, or the Pacific
Exchange.
Dividends that are not
qualified dividends.
The following
dividends are not
qualified dividends.
They are not qualified
dividends even if they
are shown in box 1b of
Form 1099-DIV.
Capital gain
distributions.
Dividends
paid on deposits
with mutual
savings banks,
cooperative
banks, credit
unions, U.S.
building and
loan
associations,
U.S. savings and
loan
associations,
federal savings
and loan
associations,
and similar
financial
institutions.
(Report these
amounts as
interest
income.)
Dividends
from a
corporation that
is a tax-exempt
organization or
farmer's
cooperative
during the
corporation's
tax year in
which the
dividends were
paid or during
the
corporation's
previous tax
year.
Dividends
paid by a
corporation on
employer
securities which
are held on the
date of record
by an employee
stock ownership
plan (ESOP)
maintained by
that
corporation.
Dividends on
any share of
stock to the
extent that you
are obligated
(whether under a
short sale or
otherwise) to
make related
payments for
positions in
substantially
similar or
related
property.
Payments in
lieu of
dividends, but
only if you know
or have reason
to know that the
payments are not
qualified
dividends.
Payments
shown in Form
1099-DIV, box
1b, from a
foreign
corporation to
the extent you
know or have
reason to know
the payments are
not qualified
dividends.
Income tax
treaties that
the United
States has with
the following
countries
satisfy
requirement (2)
under
Qualified
foreign
corporation.
Australia
Ireland
Romania
Austria
Israel
Russian
Belgium
Italy
Federation
Canada
Jamaica
Slovak
China
Japan
Republic
Cyprus
Kazakhstan
Slovenia
Czech
Korea
South Africa
Republic
Latvia
Spain
Denmark
Lithuania
Sweden
Egypt
Luxembourg
Switzerland
Estonia
Mexico
Thailand
Finland
Morocco
Trinidad and
France
Netherlands
Tobago
Germany
New Zealand
Tunisia
Greece
Norway
Turkey
Hungary
Pakistan
Ukraine
Iceland
Philippines
United
India
Poland
Kingdom
Indonesia
Portugal
Venezuela
Dividends
Used to Buy More
Stock
The corporation in which
you own stock may have a
dividend reinvestment plan.
This plan lets you
choose to use your dividends
to buy (through an agent)
more shares of stock in the
corporation instead of
receiving the dividends in
cash. If you are a member of
this type of plan and you
use your dividends to buy
more stock at a price equal
to its fair market value,
you still must report the
dividends as income.
If you are a member of a
dividend reinvestment plan
that lets you buy more stock
at a price less than its
fair market value, you must
report as dividend income
the fair market value of the
additional stock on the
dividend payment date.
You also must report as
dividend income any service
charge subtracted from your
cash dividends before the
dividends are used to buy
the additional stock. But
you may be able to deduct
the service charge. See
chapter 30 for more
information about deducting
expenses of producing
income.
In some dividend
reinvestment plans, you can
invest more cash to buy
shares of stock at a price
less than fair market value.
If you choose to do this,
you must report as dividend
income the difference
between the cash you invest
and the fair market value of
the stock you buy. When
figuring this amount, use
the fair market value of the
stock on the dividend
payment date.
Money Market
Funds
Report amounts you
receive from money market
funds as dividend income.
Money market funds are a
type of mutual fund and
should not be confused with
bank money market accounts
that pay interest.
Capital Gain
Distributions
Capital gain distributions
(also called capital gain
dividends) are paid to you or
credited to your account by
regulated investment companies
(commonly called mutual funds)
and real estate investment
trusts (REITs). They will be
shown in box 2a of the Form
1099-DIV you receive from the
mutual fund or REIT.
Report capital gain
distributions as long-term
capital gains regardless of how
long you owned your shares in
the mutual fund or REIT.
Undistributed capital gains
of mutual funds and REITs.Some mutual funds and
REITs keep their long-term
capital gains and pay tax on
them. You must treat your
share of these gains as
distributions, even though
you did not actually receive
them. However, they are not
included on Form 1099-DIV.
Instead, they are reported
to you on Form 2439, Notice
to Shareholder of
Undistributed Long-Term
Capital Gains.
Report undistributed
capital gains shown in box
1a of Form 2439 as long-term
capital gains on Schedule D
(Form 1040), column (f),
line 11. The tax paid on
these gains by the mutual
fund or REIT is shown in box
2 of Form 2439. You take
credit for this tax by
including it on Form 1040,
line 69, and checking box a
on that line. Attach Copy B
of Form 2439 to your return,
and keep Copy C for your
records.
Basis
adjustment.
Increase your basis in
your mutual fund, or your
interest in a REIT, by the
difference between the gain
you report and the credit
you claim for the tax paid.
Additional
information. For more
information on the treatment
of distributions from mutual
funds, see Publication 564.
Nondividend
Distributions
A nondividend distribution
is a distribution that is not
paid out of the earnings and
profits of a corporation. You
should receive a Form 1099-DIV
or other statement from the
corporation showing the
nondividend distribution. On
Form 1099-DIV, a nondividend
distribution will be shown in
box 3. If you do not receive
such a statement, you report the
distribution as an ordinary
dividend.
Basis
adjustment. A
nondividend distribution
reduces the basis of your
stock. It is not taxed until
your basis in the stock is
fully recovered. This
nontaxable portion is also
called a return of capital.
It is a return of your
investment in the stock of
the company. If you buy
stock in a corporation in
different lots at different
times, and you cannot
definitely identify the
shares subject to the
nondividend distribution,
reduce the basis of your
earliest purchases first.
When the basis of your
stock has been reduced to
zero, report any additional
nondividend distribution
that you receive as a
capital gain. Whether you
report it as a long-term or
short-term capital gain
depends on how long you have
held the stock. See
Holding Period
in chapter 15.
Example.
You bought stock in
1992 for $100. In 1995,
you received a
nondividend distribution
of $80. You did not
include this amount in
your income, but you
reduced the basis of
your stock to $20. You
received a nondividend
distribution of $30 in
2004. The first $20 of
this amount reduced your
basis to zero. You
report the other $10 as
a long-term capital gain
for 2004. You must
report as a long-term
capital gain any
nondividend distribution
you receive on this
stock in later years.
Liquidating
Distributions
Liquidating
distributions, sometimes
called liquidating
dividends, are distributions
you receive during a partial
or complete liquidation of a
corporation. These
distributions are, at least
in part, one form of a
return of capital. They may
be paid in one or more
installments. You will
receive a Form 1099-DIV from
the corporation showing you
the amount of the
liquidating distribution in
box 8 or 9.
For more information on
liquidating distributions,
see chapter 1 of Publication
550.
Distributions of
Stock and Stock
Rights
Distributions by a
corporation of its own stock
are commonly known as stock
dividends. Stock rights
(also known as “stock
options”) are
distributions by a
corporation of rights to
acquire the corporation's
stock. Generally, stock
dividends and stock rights
are not taxable to you, and
you do not report them on
your return.
Taxable
stock dividends and
stock rights.
Distributions of stock
dividends and stock
rights are taxable to
you if any of the
following apply.
You or any
other
shareholder has
the choice to
receive cash or
other property
instead of stock
or stock rights.
The
distribution
gives cash or
other property
to some
shareholders and
an increase in
the percentage
interest in the
corporation's
assets or
earnings and
profits to other
shareholders.
The
distribution is
in convertible
preferred stock
and has the same
result as in
(2).
The
distribution
gives preferred
stock to some
common stock
shareholders and
common stock to
other common
stock
shareholders.
The
distribution is
on preferred
stock. (The
distribution,
however, is not
taxable if it is
an increase in
the conversion
ratio of
convertible
preferred stock
made solely to
take into
account a stock
dividend, stock
split, or
similar event
that would
otherwise result
in reducing the
conversion
right.)
The term “stock”
includes rights to
acquire stock, and the
term “shareholder”
includes a holder of
rights or of convertible
securities.
If you receive taxable
stock dividends or stock
rights, include their fair
market value at the time of
the distribution in your
income.
Preferred stock
redeemable at a premium.
If you hold preferred
stock having a
redemption price higher
than its issue price,
the difference (the
redemption premium)
generally is taxable as
a constructive
distribution of
additional stock on the
preferred stock. For
more information, see
chapter 1 of Publication
550.
Basis.
Your basis in stock or
stock rights received in
a taxable distribution
is their fair market
value when distributed.
If you receive stock or
stock rights that are
not taxable to you, see
Stocks and Bonds
under
Basis of Investment
Property in
chapter 4 of Publication
550 for information on
how to figure their
basis.
Fractional shares.You may not own
enough stock in a
corporation to receive a
full share of stock if
the corporation declares
a stock dividend.
However, with the
approval of the
shareholders, the
corporation may set up a
plan in which fractional
shares are not issued,
but instead are sold,
and the cash proceeds
are given to the
shareholders. Any cash
you receive for
fractional shares under
such a plan is treated
as an amount realized on
the sale of the
fractional shares. You
must determine your gain
or loss and report it as
a capital gain or loss
on Schedule D (Form
1040). Your gain or loss
is the difference
between the cash you
receive and the basis of
the fractional shares
sold.
Example.
You own one share
of common stock that
you bought on
January 3, 1996, for
$100. The
corporation declared
a common stock
dividend of 5% on
June 30, 2004. The
fair market value of
the stock at the
time the stock
dividend was
declared was $200.
You were paid $10
for the
fractional-share
stock dividend under
a plan described in
the above paragraph.
You figure your gain
or loss as follows:
Fair
market
value of
old
stock
$200.00
Fair
market
value of
stock
dividend
(cash
received)
+10.00
Fair
market
value of
old
stock
and
stock
dividend
$210.00
Basis
(cost)
of old
stock
after
the
stock
dividend
(($200 ÷
$210) ×
$100)
$95.24
Basis
(cost)
of stock
dividend
(($10 ÷
$210) ×
$100)
+ 4.76
Total
$100.00
Cash
received
$10.00
Basis
(cost)
of stock
dividend
- 4.76
Gain
$5.24
Because you had
held the share of
stock for more than
1 year at the time
the stock dividend
was declared, your
gain on the stock
dividend is a
long-term capital
gain.
Scrip dividends.
A corporation that
declares a stock
dividend may issue you a
scrip certificate that
entitles you to a
fractional share. The
certificate is generally
nontaxable when you
receive it. If you
choose to have the
corporation sell the
certificate for you and
give you the proceeds,
your gain or loss is the
difference between the
proceeds and the portion
of your basis in the
corporation's stock that
is allocated to the
certificate.
However, if you
receive a scrip
certificate that you can
choose to redeem for
cash instead of stock,
the certificate is
taxable when you receive
it. You must include its
fair market value in
income on the date you
receive it.
Other Distributions
You may receive any of the
following distributions during
the year.
Exempt-interest dividends.
Exempt-interest dividends
you receive from a regulated
investment company (mutual
fund) are not included in
your taxable income. You
will receive a notice from
the mutual fund telling you
the amount of the
exempt-interest dividends
you received.
Exempt-interest dividends
are not shown on Form
1099-DIV or Form 1099-INT.
Information reporting
requirement.
Although exempt-interest
dividends are not taxable,
you must show them on your
tax return if you have to
file a return. This is an
information reporting
requirement and does not
change the exempt-interest
dividends to taxable income.
Alternative minimum tax
treatment.
Exempt-interest dividends
paid from specified private
activity bonds may be
subject to the alternative
minimum tax. See
Alternative Minimum Tax in chapter 32 for
more information.
Dividends
on insurance policies.Insurance policy
dividends that the insurer
keeps and uses to pay your
premiums are not taxable.
However, you must report as
taxable interest income the
interest that is paid or
credited on dividends left
with the insurance company.
If dividends on an
insurance contract (other
than a modified endowment
contract) are distributed to
you, they are a partial
return of the premiums you
paid. Do not include them in
your gross income until they
are more than the total of
all net premiums you paid
for the contract. Report any
taxable distributions on
insurance policies on Form
1040, line 16b, or Form
1040A, line 12b.
Dividends
on veterans' insurance.
Dividends you receive on
veterans' insurance policies
are not taxable. In
addition, interest on
dividends left with the
Department of Veterans
Affairs is not taxable.
Patronage
dividends.
Generally, patronage
dividends you receive in
money from a cooperative
organization are included in
your income.
Do not include in your
income patronage dividends
you receive on:
Property bought
for your personal
use, or
Capital assets
or depreciable
property bought for
use in your
business. But you
must reduce the
basis (cost) of the
items bought. If the
dividend is more
than the adjusted
basis of the assets,
you must report the
excess as income.
These rules are the same
whether the cooperative
paying the dividend is a
taxable or tax-exempt
cooperative.
Alaska
Permanent Fund dividends.Do not report these
amounts as dividends.
Instead, report these
amounts on Form 1040, line
21, Form 1040A, line 13, or
Form 1040EZ, line 3.
How To Report
Dividend Income
Generally, you can use
either Form 1040 or Form 1040A
to report your dividend income.
Report the total of your
ordinary dividends on line 9a of
Form 1040 or Form 1040A. Report
qualified dividends on line 9b
of that form.
If you receive capital gain
distributions, you may be able
to use Form 1040A or you may
have to use Form 1040. See
Capital gain distributions only
in chapter 17. If
you receive nondividend
distributions required to be
reported as capital gains, you
must use Form 1040. You cannot
use Form 1040EZ if you receive
any dividend income.
Form
1099-DIV.
If you owned stock on
which you received $10 or
more in dividends and other
distributions, you should
receive a Form 1099-DIV.
Even if you do not receive
Form 1099-DIV, you must
report all of your taxable
dividend income.
See Form 1099-DIV for more
information on how to report
dividend income.
Form 1040A.
You must complete
Schedule 1 (Form 1040A),
Part II, and attach it to
your Form 1040A, if:
Your ordinary
dividends (Form
1099-DIV, box 1a)
are more than
$1,500, or
You received, as
a nominee, ordinary
dividends that
actually belong to
someone else.
List on line 5 each
payer's name and the amount
of ordinary dividends you
received. If you received a
Form 1099-DIV from a
brokerage firm, list the
brokerage firm as the payer.
Enter on line 6 the total
of the amounts listed on
line 5. Also enter this
total on Form 1040A, line
9a.
Form 1040.You must fill in
Schedule B, Part II, and
attach it to your Form 1040,
if:
Your ordinary
dividends (box 1a of
Form 1099-DIV) are
more than $1,500, or
You received, as
a nominee, ordinary
dividends that
actually belong to
someone else.
If your ordinary dividends
are more than $1,500, you
must also complete Schedule
B, Part III.
List on Schedule B, Part
II, line 5, each payer's
name and the amount of
ordinary dividends you
received. If your securities
are held by a brokerage firm
(in “street
name”), list the name
of the brokerage firm that
is shown on Form 1099-DIV as
the payer. If your stock is
held by a nominee who is the
owner of record, and the
nominee credited or paid you
dividends on the stock, show
the name of the nominee and
the dividends you received
or for which you were
credited.
Enter on line 6 the total
of the amounts listed on
line 5. Also enter this
total on Form 1040, line 9a.
Qualified
dividends.
Report qualified dividends
(Form 1099-DIV, box 1b) on
line 9b of Form 1040 or Form
1040A. Do not include any of
the following on line 9b.
Qualified
dividends you
received as a
nominee. See
Nominees
under
How to Report
Dividend Income
in chapter 1 of
Publication 550.
Dividends on
stock for which you
did not meet the
holding period. See
Holding period
earlier under
Qualified
Dividends.
Dividends on any
share of stock to
the extent that you
are obligated
(whether under a
short sale or
otherwise) to make
related payments for
positions in
substantially
similar or related
property.
Payments in lieu
of dividends, but
only if you know or
have reason to know
that the payments
are not qualified
dividends.
Payments shown
in Form 1099-DIV,
box 1b, from a
foreign corporation
to the extent you
know or have reason
to know the payments
are not qualified
dividends.
If you have qualified
dividends, you must figure
your tax by completing the
Qualified Dividends and
Capital Gain Tax Worksheet
in the Form 1040 or 1040A
instructions or the Schedule
D Tax Worksheet in the
Schedule D instructions,
whichever applies. Enter
qualified dividends on line
2 of the worksheet.
Investment interest
deducted. If you
claim a deduction for
investment interest, you may
have to reduce the amount of
your qualified dividends
that are eligible for the 5%
or 15% tax rate. Reduce it
by the amount of qualified
dividends you choose to
include in investment income
when figuring the limit on
your investment interest
deduction. This is done on
the Qualified Dividends and
Capital Gain Tax Worksheet
or the Schedule D Tax
Worksheet. For more
information about the limit
on investment interest, see
Interest Expenses
in chapter 25.
Expenses
related to dividend income.
You may be able to deduct
expenses related to dividend
income if you itemize your
deductions on Schedule A
(Form 1040). See chapter 30
for general information
about deducting expenses of
producing income.
More
information.For more information
about how to report dividend
income, see chapter 1 of
Publication 550 or the
instructions for the form
you must file.
