What Is Form 1099-DIV?
Form 1099-DIV is an IRS document issued to taxpayers who earn dividends or distributions from stocks, mutual funds, or other investments during the tax year. Financial institutions, such as banks or brokerage firms, send the form to both the taxpayer and the IRS by January 31, 2024.
You will only receive this form if your cumulative dividends exceed $10 in the year. The information in Form 1099-DIV calculates taxes owed on income like ordinary dividends, qualified dividends, and capital gain distributions. Qualified dividends often receive more favorable tax treatment as they are taxed at long-term capital gains rates.
Who needs to file Form 1099-DIV?
Issuers of the form: Financial institutions, corporations, and mutual funds must prepare and issue Form 1099-DIV if they paid dividends during the tax year.
Recipients: As an investor, you do not fill out the form but must include the information on your tax return. If you have more than $1,500 in dividends, you must also complete Schedule B along with Form 1040.
Key updates for 2024
- Electronic filing threshold adjustments
Starting with the 2024 tax year, the IRS has reduced the threshold for mandatory electronic filing. Institutions filing multiple 1099-DIV forms must use e-filing systems if they exceed the lower threshold, simplifying data aggregation for taxpayers. - Enhanced clarity for FATCA reporting
Foreign Account Tax Compliance Act (FATCA) requirements now include clearer guidelines for box 11. Taxpayers receiving dividends from foreign accounts must ensure these amounts are appropriately documented. - New deadlines and extended Filing Options
- Deadline for furnishing Form 1099-DIV to recipients: January 31, 2025.
- Deadline for filing with the IRS (paper and electronic): March 1, 2025 (for paper filing) and March 31, 2025 (for electronic filing).
- Detailed reporting of capital gains
Enhanced instructions emphasize separating short-term and long-term capital gains, ensuring investors can correctly determine tax rates applicable to their earnings. - Backup withholding alerts
Additional emphasis is placed on backup withholding for recipients who fail to provide accurate taxpayer identification numbers (TINs). The IRS will impose a 24% withholding rate in such cases.
Sections of Form 1099-DIV
The form contains several boxes providing critical details for tax reporting:
- Box 1a. Total Ordinary Dividends
Enter dividends, including dividends from money market funds, net short-term capital gains from mutual funds, and other distributions on stock.
- Box 1b. Qualified Dividends
Enter the portion of the dividends in box 1a that qualifies for the reduced capital gains rates.
- Box 2a. Total Capital Gain Distr.
Enter total capital gain distributions (long-term).
- Box 2b. Unrecap. Sec. 1250 Gain
Enter any amount included in box 2a that is an unrecaptured section 1250 gain from certain depreciable real property.
- Box 2c. Section 1202 Gain
Enter any amount included in box 2a that is a section 1202 gain from certain qualified small business stock.
- Box 2d. Collectibles (28%) Gain
Enter any amount included in box 2a that is a 28% rate gain from sales or exchanges of collectibles.
- Box 2e. Section 897 Ordinary dividends
Enter any amount included in box 1a that is section 897 gain from dispositions of USRPI.
- Box 2f. Section 897 Capital Gain
Enter any amount included in box 2a that is section 897 gain from dispositions of USRPI.
- Box 3. Nondividend distributions
Enter non-dividend distributions, if determinable.
- Box 4. Federal income tax withheld
Enter backup withholding. Recipients who have not furnished their TINs to you in the manner required are subject to backup withholding on certain dividend payments reported on this form.
- Box 5. Section 199A Dividends
Enter the qualified REIT dividends paid by a REIT or section 199A dividends paid by a RIC to the recipient.
- Box 6. Investment expenses
Enter the recipient’s pro rata share of certain amounts deductible by a non publicly offered RIC in computing its taxable income.
- Box 7. Foreign Tax Paid
Enter foreign tax paid on dividends and other distributions on stock. A RIC must report only the amount it elects to pass through to the recipient. Report this amount in U.S. dollars.
- Box 8. Foreign Country or US Possession
Enter the name of the foreign country or U.S. possession for which the foreign tax was paid and reported in box 7.
- Box 9. Cash Liquidation Distributions
Enter cash distributed as part of a liquidation.
- Box 10. Noncash Liquidation Distributions
Enter non-cash distributions made as part of a liquidation.
- Box 11. FATCA Filing Requirement
Check the box if you are a US payer that is reporting on Form(s) 1099 (including reporting distributions in boxes 1 through 3 and 9, 10, 12, and 13 on this Form 1099-DIV) as part of satisfying your requirement to report with respect to a US account for the purposes of chapter 4 of the Internal Revenue Code, as described in Regulations section 1.1471-4(d)(2)(iii)(A).
- Box 12. Exempt-Interest Dividends
Enter exempt-interest dividends from a mutual fund or other RIC.
- Box 13. Specified Private Activity Bond Interest Dividends
Enter exempt-interest dividends paid by a RIC on specified private activity bonds to the extent that the dividends are attributable to interest on the bonds received by the RIC minus an allocable share of the expenses.
- Boxes 14–16. State information
These boxes, and Copies 1 and 2, are provided for your convenience only and need not be completed for the IRS.
How to use Form 1099-DIV for tax filing
- Verify the information: Ensure all details, including your name, address, and Social Security Number, are accurate. Any discrepancies should be reported to the issuer for correction.
- Report on your tax return:
- Use Schedule B if your taxable interest and dividends exceed $1,500.
- Include totals directly on Form 1040 under the appropriate sections.
- Pay special attention to qualified dividends: These are taxed at a lower rate than ordinary income, provided you meet holding period requirements. For 2024, the tax rate for qualified dividends ranges from 0% to 20%, depending on your income level.
Where to get Form 1099-DIV
Form 1099-DIV is generally sent to you by mail or made available electronically by your financial institution. You can also download it from the IRS website. Ensure you receive all your forms, as failing to report dividend income can result in penalties.
Additional considerations
- Foreign Account Tax Compliance Act (FATCA): If you hold foreign investments, additional reporting may be required under FATCA guidelines.
- Non-Dividend distributions: These are not taxable but reduce the cost basis of your investment.
- Tax implications for retirement accounts: Dividends in tax-advantaged accounts like Roth IRAs are generally not taxed until withdrawal.
Why you might not receive Form 1099-DIV
If your total dividends for the year are less than $10, you will not receive Form 1099-DIV. However, you must still report this income on your tax return if applicable.
