Understanding Form 1099-DIV: Dividend Income Reported to the IRS

What Form 1099-DIV reports

Form 1099-DIV is a tax document that reports dividend income you received during the year. Your brokerage, mutual fund company, or other investment firm sends you this form if you earned dividends — payments made by companies or funds to shareholders — that total $10 or more in a calendar year. The IRS receives a copy at the same time you do.

The form breaks down different types of dividend payments into separate boxes. Ordinary dividends appear in Box 1a, may have access to dividends in Box 1b, capital gain distributions in Box 2a through 2d, and nondividend distributions in Box 3. Each type has different tax treatment when you file your return.

You receive a 1099-DIV for each account or investment firm that paid you dividends. If you hold mutual funds at two different brokerages, you will receive two separate forms. The form shows the exact dollar amount paid to you and identifies the payer by name and tax ID number.

Key Takeaways

• Form 1099-DIV reports dividend income of $10 or more paid to you during the tax year by investment firms, mutual funds, or corporations.
• The form separates ordinary dividends, may have access to dividends, capital gain distributions, and nondividend distributions into different boxes, each taxed differently.
• You receive a 1099-DIV from each brokerage or fund company that paid you dividends, and the IRS receives an identical copy.
• may have access to dividends are taxed at lower rates than ordinary dividends if you meet holding period and other requirements.
• You must report all 1099-DIV income on your tax return even if you do not receive the form by the filing important date.

Ordinary dividends versus may have access to dividends

Box 1a shows ordinary dividends, which are taxed as regular income at your marginal tax rate. These include most dividend payments from stocks, mutual funds, and real estate investment trusts (REITs). Ordinary dividends are added to your wages and other income and taxed at the same rate.

Box 1b shows may have access to dividends, which receive preferential tax treatment if you meet holding requirements. To may have access to, you must have owned the stock for more than 60 days during the 121-day window centered on the ex-dividend date — the date the company sets as the cutoff for receiving the dividend. may have access to dividends are taxed at 0%, 15%, or 20% depending on your income level, which is typically lower than your ordinary income tax rate.

The same dividend payment can appear in both boxes. Box 1a will show the total, and Box 1b will show the portion that meets the holding period test. If you sold the stock too quickly or held it during a period when you were protected from loss (such as through a short sale or put option), some or all of the dividend may be classified as ordinary rather than may have access to.

Capital gain distributions and nondividend distributions

Boxes 2a through 2d report capital gain distributions — profits that mutual funds or ETFs realized when they sold securities at a gain and passed those gains to you. These are treated as long-term capital gains on your tax return, regardless of how long you owned the fund. Long-term capital gains receive the same preferential tax rates as may have access to dividends (0%, 15%, or 20%).

Box 3 shows nondividend distributions, which are returns of your own principal rather than earnings. These reduce your cost basis in the investment and are not taxed as income. If you later sell the investment, your basis will be lower, which may result in a larger taxable gain.

Some mutual funds and REITs make distributions that combine multiple types. A single payment might include ordinary dividends, may have access to dividends, and capital gains. The 1099-DIV separates each component so you can report them correctly on your return.

When you receive Form 1099-DIV

Investment firms must send you Form 1099-DIV by January 31 of the year following the tax year in which you received the dividends. The IRS receives its copy on the same schedule. If you do not receive the form by early February, contact your brokerage or fund company to request it.

You may receive multiple 1099-DIVs if you hold investments at different firms. Consolidate all forms when you file your return — do not file separate returns for each one. If a firm fails to send you a 1099-DIV for dividends you know you received, contact them in writing and keep a copy of your request.

Some dividend payments may not appear on a 1099-DIV. Dividends paid by a corporation directly to you (not through a brokerage) may not be reported on a 1099-DIV if the amount is under $10. You are still required to report this income on your tax return.

Reporting 1099-DIV income on your tax return

You report 1099-DIV income on Schedule B (Interest and Ordinary Dividends) and Schedule D (Capital Gains and Losses) of Form 1040. Ordinary dividends from Box 1a go on Schedule B. may have access to dividends from Box 1b are listed separately on Schedule B and then transferred to Schedule D to receive preferential tax rates. Capital gain distributions go directly on Schedule D.

If your total dividends and interest exceed $1,500, you must use Schedule B. If your total is $1,500 or less, you can report the amount directly on Form 1040 without using Schedule B, though using the schedule is also acceptable.

The IRS matches the 1099-DIV information it receives from your investment firm against what you report on your return. If the amounts do not match, you may receive a notice. Report all dividend income even if you do not receive a 1099-DIV or if the form arrives late.

Dividend income from foreign investments

If you own foreign stocks or international mutual funds, the 1099-DIV will show any foreign taxes withheld in Box 6. You may be able to claim a foreign tax credit on Form 1118 or deduct the foreign taxes paid, depending on your situation and total foreign income. The rules for foreign tax credits are complex and depend on your total foreign income and tax liability.

Some foreign dividends may not appear on a 1099-DIV at all if they were paid directly by a foreign company rather than through a U.S. brokerage. You are still required to report this income. Keep records of any foreign dividends you receive outside the 1099-DIV system.

Frequently Asked Questions

What if I receive a 1099-DIV but the amount is wrong?

Contact your investment firm when ready and ask them to issue a corrected form (Form 1099-DIV with a "CORRECTED" label). The firm must send the corrected form to you and the IRS. Do not file your tax return until you receive the corrected form, or file an amended return once you do.

Do I have to report dividends under $10?

Yes. The $10 threshold only determines whether the firm must send you a 1099-DIV. You must report all dividend income on your tax return regardless of amount. Keep your own records of small dividend payments.

What is the difference between a dividend and a capital gain distribution?

A dividend is a payment made by a company from its earnings to shareholders. A capital gain distribution is a payment made by a mutual fund or ETF when it sells securities at a profit and distributes those gains to fund holders. Dividends come from company earnings; capital gains come from investment sales.

Can I have may have access to dividends if I bought the stock right before the ex-dividend date?

No. You must own the stock for more than 60 days during a 121-day window centered on the ex-dividend date. If you bought the stock when ready before the ex-dividend date and sold it shortly after, the dividend will be classified as ordinary, not may have access to.

What happens if my brokerage does not send me a 1099-DIV?

Contact the firm in writing and request the form. Keep a copy of your request. If they do not respond within 30 days, contact the IRS at 800-829-1040. You can also file your return based on your own records and attach a statement explaining why you do not have the form.