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Need 2010 Taxes

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Need 2010 Taxes

Need 2010 taxes 8. Need 2010 taxes   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. Need 2010 taxes Reporting tax withheld. Need 2010 taxes Nominees. Need 2010 taxes Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. Need 2010 taxes Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. Need 2010 taxes Alternative minimum tax treatment. Need 2010 taxes How To Report Dividend IncomeInvestment interest deducted. Need 2010 taxes Reminder Foreign-source income. Need 2010 taxes  If you are a U. Need 2010 taxes S. Need 2010 taxes citizen with dividend income from sources outside the United States (foreign-source income), you must report that income on your tax return unless it is exempt by U. Need 2010 taxes S. Need 2010 taxes law. Need 2010 taxes 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. Need 2010 taxes 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. Need 2010 taxes This chapter also explains how to report dividend income on your tax return. Need 2010 taxes Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. Need 2010 taxes You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. Need 2010 taxes However, some amounts you receive that are called dividends are actually interest income. Need 2010 taxes (See Dividends that are actually interest under Taxable Interest in chapter 7. Need 2010 taxes ) Most distributions are paid in cash (or check). Need 2010 taxes However, distributions can consist of more stock, stock rights, other property, or services. Need 2010 taxes Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 550 Investment Income and Expenses Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends General Information This section discusses general rules for dividend income. Need 2010 taxes Tax on unearned income of certain children. Need 2010 taxes   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Need 2010 taxes If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. Need 2010 taxes If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Need 2010 taxes    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Need 2010 taxes Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. Need 2010 taxes   For more information about the tax on unearned income of children and the parents' election, see chapter 31. Need 2010 taxes Beneficiary of an estate or trust. Need 2010 taxes    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. Need 2010 taxes You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Need 2010 taxes , from the fiduciary. Need 2010 taxes Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Need 2010 taxes Social security number (SSN) or individual taxpayer identification number (ITIN). Need 2010 taxes    You must give your SSN or ITIN to any person required by federal tax law to make a return, statement, or other document that relates to you. Need 2010 taxes This includes payers of dividends. Need 2010 taxes If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. Need 2010 taxes For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. Need 2010 taxes Backup withholding. Need 2010 taxes   Your dividend income is generally not subject to regular withholding. Need 2010 taxes However, it may be subject to backup withholding to ensure that income tax is collected on the income. Need 2010 taxes Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Need 2010 taxes   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. Need 2010 taxes For more information, see Backup Withholding in chapter 4. Need 2010 taxes Stock certificate in two or more names. Need 2010 taxes   If two or more persons hold stock as joint tenants, tenants by the entirety, or tenants in common, each person's share of any dividends from the stock is determined by local law. Need 2010 taxes Form 1099-DIV. Need 2010 taxes   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. Need 2010 taxes Keep this form with your records. Need 2010 taxes You do not have to attach it to your tax return. Need 2010 taxes Dividends not reported on Form 1099-DIV. Need 2010 taxes   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. Need 2010 taxes For example, you may receive distributive shares of dividends from partnerships or S corporations. Need 2010 taxes These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Need 2010 taxes , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Need 2010 taxes Reporting tax withheld. Need 2010 taxes   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. Need 2010 taxes Nominees. Need 2010 taxes   If someone receives distributions as a nominee for you, that person should give you a Form 1099-DIV, which will show distributions received on your behalf. Need 2010 taxes Form 1099-MISC. Need 2010 taxes   Certain substitute payments in lieu of dividends or tax-exempt interest received by a broker on your behalf must be reported to you on Form 1099-MISC, Miscellaneous Income, or a similar statement. Need 2010 taxes See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. Need 2010 taxes Incorrect amount shown on a Form 1099. Need 2010 taxes   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Need 2010 taxes The new Form 1099 you receive will be marked “Corrected. Need 2010 taxes ” Dividends on stock sold. Need 2010 taxes   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. Need 2010 taxes Dividends received in January. Need 2010 taxes   If a mutual fund (or other regulated investment company) 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. Need 2010 taxes You report the dividend in the year it was declared. Need 2010 taxes Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. Need 2010 taxes They are paid out of earnings and profits and are ordinary income to you. Need 2010 taxes This means they are not capital gains. Need 2010 taxes You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. Need 2010 taxes Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. Need 2010 taxes Qualified Dividends Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. Need 2010 taxes They should be shown in box 1b of the Form 1099-DIV you receive. Need 2010 taxes The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. Need 2010 taxes 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. Need 2010 taxes 6%. Need 2010 taxes 20% on any amount that otherwise would be taxed at a 39. Need 2010 taxes 6% rate. Need 2010 taxes To qualify for the maximum rate, all of the following requirements must be met. Need 2010 taxes The dividends must have been paid by a U. Need 2010 taxes S. Need 2010 taxes corporation or a qualified foreign corporation. Need 2010 taxes (See Qualified foreign corporation , later. Need 2010 taxes ) The dividends are not of the type listed later under Dividends that are not qualified dividends . Need 2010 taxes You meet the holding period (discussed next). Need 2010 taxes Holding period. Need 2010 taxes   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. Need 2010 taxes The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. Need 2010 taxes Instead, the seller will get the dividend. Need 2010 taxes   When counting the number of days you held the stock, include the day you disposed of the stock, but not the day you acquired it. Need 2010 taxes See the examples later. Need 2010 taxes Exception for preferred stock. Need 2010 taxes   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 due to periods totaling more than 366 days. Need 2010 taxes If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. Need 2010 taxes Example 1. Need 2010 taxes You bought 5,000 shares of XYZ Corp. Need 2010 taxes common stock on July 9, 2013. Need 2010 taxes XYZ Corp. Need 2010 taxes paid a cash dividend of 10 cents per share. Need 2010 taxes The ex-dividend date was July 16, 2013. Need 2010 taxes Your Form 1099-DIV from XYZ Corp. Need 2010 taxes shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). Need 2010 taxes However, you sold the 5,000 shares on August 12, 2013. Need 2010 taxes You held your shares of XYZ Corp. Need 2010 taxes for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). Need 2010 taxes The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. Need 2010 taxes You have no qualified dividends from XYZ Corp. Need 2010 taxes because you held the XYZ stock for less than 61 days. Need 2010 taxes Example 2. Need 2010 taxes Assume the same facts as in Example 1 except that you bought the stock on July 15, 2013 (the day before the ex-dividend date), and you sold the stock on September 16, 2013. Need 2010 taxes You held the stock for 63 days (from July 16, 2013, through September 16, 2013). Need 2010 taxes 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 16, 2013, through September 14, 2013). Need 2010 taxes Example 3. Need 2010 taxes You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. Need 2010 taxes ABC Mutual Fund paid a cash dividend of 10 cents a share. Need 2010 taxes The ex-dividend date was July 16, 2013. Need 2010 taxes The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. Need 2010 taxes Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. Need 2010 taxes However, you sold the 10,000 shares on August 12, 2013. Need 2010 taxes You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. Need 2010 taxes Holding period reduced where risk of loss is diminished. Need 2010 taxes   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. Need 2010 taxes 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. Need 2010 taxes You were grantor (writer) of an option to buy substantially identical stock or securities. Need 2010 taxes Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. Need 2010 taxes   For information about how to apply condition (3), see Regulations section 1. Need 2010 taxes 246-5. Need 2010 taxes Qualified foreign corporation. Need 2010 taxes   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. Need 2010 taxes The corporation is incorporated in a U. Need 2010 taxes S. Need 2010 taxes possession. Need 2010 taxes 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. Need 2010 taxes For a list of those treaties, see Table 8-1. Need 2010 taxes 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. Need 2010 taxes See Readily tradable stock , later. Need 2010 taxes Exception. Need 2010 taxes   A corporation is not a qualified foreign corporation if it is a passive foreign investment company during its tax year in which the dividends are paid or during its previous tax year. Need 2010 taxes Readily tradable stock. Need 2010 taxes   Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement (3) under Qualified foreign corporation , if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. Need 2010 taxes For a list of the exchanges that meet these requirements, see www. Need 2010 taxes sec. Need 2010 taxes gov/divisions/marketreg/mrexchanges. Need 2010 taxes shtml. Need 2010 taxes Dividends that are not qualified dividends. Need 2010 taxes   The following dividends are not qualified dividends. Need 2010 taxes They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. Need 2010 taxes Capital gain distributions. Need 2010 taxes Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. Need 2010 taxes S. Need 2010 taxes building and loan associations, U. Need 2010 taxes S. Need 2010 taxes savings and loan associations, federal savings and loan associations, and similar financial institutions. Need 2010 taxes (Report these amounts as interest income. Need 2010 taxes ) 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. Need 2010 taxes Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation. Need 2010 taxes Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. Need 2010 taxes Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Need 2010 taxes 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. Need 2010 taxes Table 8-1. Need 2010 taxes Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. Need 2010 taxes Australia Indonesia Romania Austria Ireland Russian Bangladesh Israel Federation Barbados Italy Slovak Belgium Jamaica Republic Bulgaria Japan Slovenia Canada Kazakhstan South Africa China Korea Spain Cyprus Latvia Sri Lanka Czech Lithuania Sweden Republic Luxembourg Switzerland Denmark Malta Thailand Egypt Mexico Trinidad and Estonia Morocco Tobago Finland Netherlands Tunisia France New Zealand Turkey Germany Norway Ukraine Greece Pakistan United Hungary Philippines Kingdom Iceland Poland Venezuela India Portugal     Dividends Used to Buy More Stock The corporation in which you own stock may have a dividend reinvestment plan. Need 2010 taxes 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. Need 2010 taxes Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. Need 2010 taxes If 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. Need 2010 taxes 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. Need 2010 taxes 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. Need 2010 taxes But you may be able to deduct the service charge. Need 2010 taxes See chapter 28 for more information about deducting expenses of producing income. Need 2010 taxes In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. Need 2010 taxes 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. Need 2010 taxes When figuring this amount, use the fair market value of the stock on the dividend payment date. Need 2010 taxes Money Market Funds Report amounts you receive from money market funds as dividend income. Need 2010 taxes Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. Need 2010 taxes Capital Gain Distributions Capital gain distributions (also called capital gain dividends) are paid to you or credited to your account by mutual funds (or other regulated investment companies) and real estate investment trusts (REITs). Need 2010 taxes They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. Need 2010 taxes Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. Need 2010 taxes Undistributed capital gains of mutual funds and REITs. Need 2010 taxes    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. Need 2010 taxes You must treat your share of these gains as distributions, even though you did not actually receive them. Need 2010 taxes However, they are not included on Form 1099-DIV. Need 2010 taxes Instead, they are reported to you in box 1a of Form 2439. Need 2010 taxes   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. Need 2010 taxes   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. Need 2010 taxes You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. Need 2010 taxes Attach Copy B of Form 2439 to your return, and keep Copy C for your records. Need 2010 taxes Basis adjustment. Need 2010 taxes   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. Need 2010 taxes Additional information. Need 2010 taxes   For more information on the treatment of distributions from mutual funds, see Publication 550. Need 2010 taxes Nondividend Distributions A nondividend distribution is a distribution that is not paid out of the earnings and profits of a corporation or a mutual fund. Need 2010 taxes You should receive a Form 1099-DIV or other statement showing the nondividend distribution. Need 2010 taxes On Form 1099-DIV, a nondividend distribution will be shown in box 3. Need 2010 taxes If you do not receive such a statement, you report the distribution as an ordinary dividend. Need 2010 taxes Basis adjustment. Need 2010 taxes   A nondividend distribution reduces the basis of your stock. Need 2010 taxes It is not taxed until your basis in the stock is fully recovered. Need 2010 taxes This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. Need 2010 taxes 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. Need 2010 taxes   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. Need 2010 taxes Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. Need 2010 taxes See Holding Period in chapter 14. Need 2010 taxes Example. Need 2010 taxes You bought stock in 2000 for $100. Need 2010 taxes In 2003, you received a nondividend distribution of $80. Need 2010 taxes You did not include this amount in your income, but you reduced the basis of your stock to $20. Need 2010 taxes You received a nondividend distribution of $30 in 2013. Need 2010 taxes The first $20 of this amount reduced your basis to zero. Need 2010 taxes You report the other $10 as a long-term capital gain for 2013. Need 2010 taxes You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. Need 2010 taxes Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. Need 2010 taxes These distributions are, at least in part, one form of a return of capital. Need 2010 taxes They may be paid in one or more installments. Need 2010 taxes You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. Need 2010 taxes For more information on liquidating distributions, see chapter 1 of Publication 550. Need 2010 taxes Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. Need 2010 taxes Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. Need 2010 taxes Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. Need 2010 taxes Taxable stock dividends and stock rights. Need 2010 taxes   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. Need 2010 taxes You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. Need 2010 taxes 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. Need 2010 taxes The distribution is in convertible preferred stock and has the same result as in (2). Need 2010 taxes The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. Need 2010 taxes The distribution is on preferred stock. Need 2010 taxes (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. Need 2010 taxes )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. Need 2010 taxes If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. Need 2010 taxes Preferred stock redeemable at a premium. Need 2010 taxes   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. Need 2010 taxes For more information, see chapter 1 of Publication 550. Need 2010 taxes Basis. Need 2010 taxes   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. Need 2010 taxes 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. Need 2010 taxes Fractional shares. Need 2010 taxes    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. Need 2010 taxes 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. Need 2010 taxes Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. Need 2010 taxes Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. Need 2010 taxes Enter your gain or loss, the difference between the cash you receive and the basis of the fractional shares sold, in column (h) of Schedule D (Form 1040) in Part I or Part II, whichever is appropriate. Need 2010 taxes    Report these transactions on Form 8949 with the correct box checked. Need 2010 taxes   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. Need 2010 taxes Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). Need 2010 taxes Example. Need 2010 taxes You own one share of common stock that you bought on January 3, 2004, for $100. Need 2010 taxes The corporation declared a common stock dividend of 5% on June 29, 2013. Need 2010 taxes The fair market value of the stock at the time the stock dividend was declared was $200. Need 2010 taxes You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. Need 2010 taxes You figure your gain or loss as follows: Fair market value of old stock $200. Need 2010 taxes 00 Fair market value of stock dividend (cash received) +10. Need 2010 taxes 00 Fair market value of old stock and stock dividend $210. Need 2010 taxes 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. Need 2010 taxes 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. Need 2010 taxes 76 Total $100. Need 2010 taxes 00 Cash received $10. Need 2010 taxes 00 Basis (cost) of stock dividend − 4. Need 2010 taxes 76 Gain $5. Need 2010 taxes 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. Need 2010 taxes Scrip dividends. Need 2010 taxes   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. Need 2010 taxes The certificate is generally nontaxable when you receive it. Need 2010 taxes 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 allocated to the certificate. Need 2010 taxes   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. Need 2010 taxes You must include its fair market value in income on the date you receive it. Need 2010 taxes Other Distributions You may receive any of the following distributions during the year. Need 2010 taxes Exempt-interest dividends. Need 2010 taxes   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. Need 2010 taxes Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Need 2010 taxes Information reporting requirement. Need 2010 taxes   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. Need 2010 taxes This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. Need 2010 taxes Alternative minimum tax treatment. Need 2010 taxes   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Need 2010 taxes See Alternative Minimum Tax (AMT) in chapter 30 for more information. Need 2010 taxes Dividends on insurance policies. Need 2010 taxes    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. Need 2010 taxes However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. Need 2010 taxes    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. Need 2010 taxes Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. Need 2010 taxes Report any taxable distributions on insurance policies on Form 1040, line 21. Need 2010 taxes Dividends on veterans' insurance. Need 2010 taxes   Dividends you receive on veterans' insurance policies are not taxable. Need 2010 taxes In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. Need 2010 taxes Patronage dividends. Need 2010 taxes   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. Need 2010 taxes   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. Need 2010 taxes But you must reduce the basis (cost) of the items bought. Need 2010 taxes If the dividend is more than the adjusted basis of the assets, you must report the excess as income. Need 2010 taxes   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. Need 2010 taxes Alaska Permanent Fund dividends. Need 2010 taxes    Do not report these amounts as dividends. Need 2010 taxes Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. Need 2010 taxes How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. Need 2010 taxes Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. Need 2010 taxes Report qualified dividends on line 9b of Form 1040 or Form 1040A. Need 2010 taxes If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. Need 2010 taxes See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. Need 2010 taxes If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. Need 2010 taxes You cannot use Form 1040EZ if you receive any dividend income. Need 2010 taxes Form 1099-DIV. Need 2010 taxes   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. Need 2010 taxes Even if you do not receive Form 1099-DIV, you must report all your dividend income. Need 2010 taxes   See Form 1099-DIV for more information on how to report dividend income. Need 2010 taxes Form 1040A or 1040. Need 2010 taxes    You must complete Schedule B (Form 1040A or 1040), Part II, and attach it to your Form 1040A or 1040, if: Your ordinary dividends (Form 1099-DIV, box 1a) are more than $1,500, or You received, as a nominee, dividends that actually belong to someone else. Need 2010 taxes If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. Need 2010 taxes   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. Need 2010 taxes If your securities are held by a brokerage firm (in “street name”), list the name of the brokerage firm shown on Form 1099-DIV as the payer. Need 2010 taxes 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. Need 2010 taxes   Enter on line 6 the total of the amounts listed on line 5. Need 2010 taxes Also enter this total on line 9a of Form 1040A or 1040. Need 2010 taxes Qualified dividends. Need 2010 taxes   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. Need 2010 taxes The amount in box 1b is already included in box 1a. Need 2010 taxes Do not add the amount in box 1b to, or substract it from, the amount in box 1a. Need 2010 taxes   Do not include any of the following on line 9b. Need 2010 taxes Qualified dividends you received as a nominee. Need 2010 taxes See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. Need 2010 taxes Dividends on stock for which you did not meet the holding period. Need 2010 taxes See Holding period , earlier under Qualified Dividends. Need 2010 taxes Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. Need 2010 taxes Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Need 2010 taxes 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. Need 2010 taxes   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 (Form 1040) instructions, whichever applies. Need 2010 taxes Enter qualified dividends on line 2 of the worksheet. Need 2010 taxes Investment interest deducted. Need 2010 taxes   If you claim a deduction for investment interest, you may have to reduce the amount of your qualified dividends that are eligible for the 0%, 15%, or 20% tax rate. Need 2010 taxes Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. Need 2010 taxes This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. Need 2010 taxes For more information about the limit on investment interest, see Investment expenses in chapter 23. Need 2010 taxes Expenses related to dividend income. Need 2010 taxes   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). Need 2010 taxes See chapter 28 for general information about deducting expenses of producing income. Need 2010 taxes More information. Need 2010 taxes    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. Need 2010 taxes Prev  Up  Next   Home   More Online Publications
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Understanding your CP22A Notice

We made the change(s) you requested to your tax return for the tax year specified on the notice. You owe money on your taxes as a result of the change(s).

Printable samples of this notice (PDF)

Tax publications you may find useful

How to get help

Calling the toll free number listed on the top right corner of your notice is the fastest way to get your questions answered.

You can also authorize someone (such as an accountant) to contact the IRS on your behalf using this Power of Attorney and Declaration of Representative (Form 2848).

Or you may qualify for help from a Low Income Taxpayer Clinic.
 


What you need to do

  • Read your notice carefully ― it will explain why you owe money on your taxes.
  • Pay the amount owed by the date on the notice's payment coupon.
  • Make payment arrangements if you can't pay the full amount you owe.
  • Contact us if you disagree with the change(s) we made.
  • Correct the copy of your tax return that you kept for your records.

You may want to...


Answers to Common Questions

The notice says "Based on the information you provided, we changed your 200X Form 1040 to correct your:..." but I don't remember sending any change to IRS. How can I find out what IRS received to initiate this change?
Please contact us at the number listed on the top right corner of your notice for specific information about your tax return.

What do I say when I call the IRS?
Mention that you got a CP22A notice with a balance due and you need to review your account with a customer service representative. Be sure to have a copy of your notice and your tax return before you call.

What should I do if I disagree with the changes you made?
If you disagree, contact us at the toll-free number listed on the top right corner of your notice.

What happens if I can't pay the full amount I owe?
You can arrange to make a payment plan with us if you can't pay the full amount you owe.

Am I charged interest on the money I owe?
If you don't full pay the amount you owe by the date on the payment coupon, interest will accrue on the unpaid balance after that date.

Will I receive a penalty if I can't pay the full amount?
Yes, you'll receive a late payment penalty. You can contact us at the number listed on your notice if you’re unable to pay the full amount shown in your specific notice because of circumstances beyond your control. Contact us by the due date of your payment and, depending on your situation, we may be able to remove the penalty.

Can I set up a payment plan?
Yes. Call the toll-free number listed on the top right corner of your notice to discuss payment options or check out more information on payment options and how to make a payment arrangement.

There are other options, such as paying by credit card. Note: There may be a fee to pay by credit card.

What if I need to make another correction to my account?
You'll need to file Form 1040X, Amended U.S. Individual Income Tax Return.

What if I have tried to get answers and after contacting IRS several times have not been successful?
Call Taxpayer Advocate at 1-877-777-4778 or for TTY/TDD 1-800-829-4059.

What if I think I’m a victim of identity theft?
Please contact us at the number listed on the top right corner of your notice. Refer to the IRS Identity Theft resource page for more information.


Tips for next year

Consider filing your taxes electronically. Filing online can help you avoid mistakes and find credits and deductions that you may qualify for. In many cases you can file for free. Learn more about e-file.

Page Last Reviewed or Updated: 03-Mar-2014

The Need 2010 Taxes

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