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

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Phone Number: 202-387-6121

The Volunteer Income Tax Assistance

Volunteer income tax assistance Publication 1212 - Introductory Material Table of Contents Future Developments Photographs of Missing Children IntroductionOrdering forms and publications. Volunteer income tax assistance Tax questions. Volunteer income tax assistance Useful Items - You may want to see: Future Developments For the latest information about developments related to Pub. Volunteer income tax assistance 1212, such as legislation enacted after it was published, go to www. Volunteer income tax assistance irs. Volunteer income tax assistance gov/pub1212. Volunteer income tax assistance Photographs of Missing Children The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Volunteer income tax assistance Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. Volunteer income tax assistance You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child. Volunteer income tax assistance Introduction This publication has two purposes. Volunteer income tax assistance Its primary purpose is to help brokers and other middlemen identify publicly offered original issue discount (OID) debt instruments they may hold as nominees for the true owners, so they can file Forms 1099-OID or Forms 1099-INT as required. Volunteer income tax assistance The other purpose of the publication is to help owners of publicly offered OID debt instruments determine how much OID to report on their income tax returns. Volunteer income tax assistance The list of publicly offered OID debt instruments (OID list) is on the IRS website. Volunteer income tax assistance The original issue discount tables, Sections I-A through III-F, are only available on the IRS website at www. Volunteer income tax assistance irs. Volunteer income tax assistance gov/pub1212 by clicking the link under Recent Developments. Volunteer income tax assistance The tables are posted to the website in late November or early December of each year. Volunteer income tax assistance The information on these lists come from the issuers of the debt instruments and from financial publications and is updated annually. Volunteer income tax assistance (However, see Debt Instruments Not on the OID List, later. Volunteer income tax assistance ) Brokers and other middlemen can rely on this list to determine, for information reporting purposes, whether a debt instrument was issued at a discount and the OID to be reported on information returns. Volunteer income tax assistance However, because the information in the list has generally not been verified by the IRS as correct, the following tax matters are subject to change upon examination by the IRS. Volunteer income tax assistance The OID reported by owners of a debt instrument on their income tax returns. Volunteer income tax assistance The issuer's classification of an instrument as debt for federal income tax purposes. Volunteer income tax assistance Instructions for issuers of OID debt instruments. Volunteer income tax assistance   In general, issuers of publicly offered OID debt instruments must, within 30 days after the issue date, report information about the instruments to the IRS on Form 8281, Information Return for Publicly Offered Original Issue Discount Instruments. Volunteer income tax assistance See the form instructions for more information. Volunteer income tax assistance Issuers should report errors in and omissions from the list in writing at the following address:  IRS OID Publication Project SE:W:CAR:MP:T  1111 Constitution Ave. Volunteer income tax assistance NW, IR-6526 Washington, D. Volunteer income tax assistance C. Volunteer income tax assistance 20224 REMIC and CDO information reporting requirements. Volunteer income tax assistance   Brokers and other middlemen must follow special information reporting requirements for real estate mortgage investment conduits (REMIC) regular, and collateralized debt obligations (CDO) interests. Volunteer income tax assistance The rules are explained in Publication 938, Real Estate Mortgage Investment Conduits (REMICs) Reporting Information (And Other Collateralized Debt Obligations (CDOs)). Volunteer income tax assistance   Holders of interests in REMICs and CDOs should see chapter 1 of Publication 550 for information on REMICs and CDOs. Volunteer income tax assistance Comments and suggestions. Volunteer income tax assistance   We welcome your comments about this publication and your suggestions for future editions. Volunteer income tax assistance   You can write to us at the following address: Internal Revenue Service Tax Forms and Publications Division 1111 Constitution Ave. Volunteer income tax assistance NW, IR-6526 Washington, DC 20224   We respond to many letters by telephone. Volunteer income tax assistance Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Volunteer income tax assistance   You can send your comments from www. Volunteer income tax assistance irs. Volunteer income tax assistance gov/formspubs/. Volunteer income tax assistance Click on “More Information” and then on “Comment on Tax Forms and Publications. Volunteer income tax assistance ”   Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Volunteer income tax assistance Ordering forms and publications. Volunteer income tax assistance   Visit www. Volunteer income tax assistance irs. Volunteer income tax assistance gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received. Volunteer income tax assistance Internal Revenue Service 1201 N. Volunteer income tax assistance Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Volunteer income tax assistance   If you have a tax question, check the information available on IRS. Volunteer income tax assistance gov or call 1-800-829-1040. Volunteer income tax assistance We cannot answer tax questions sent to any of the preceding addresses. Volunteer income tax assistance Useful Items - You may want to see: Publication 515 Withholding of Tax on Nonresident Aliens and Foreign Entities 550 Investment Income and Expenses 938 Real Estate Mortgage Investment Conduits (REMICs) Reporting Information (And Other Collateralized Debt Obligations (CDOs)). Volunteer income tax assistance Form (and Instructions) 1096 Annual Summary and Transmittal of U. Volunteer income tax assistance S. Volunteer income tax assistance Information Returns 1099-B Proceeds From Broker and Barter Exchange Transactions 1099-INT Interest Income 1099-OID Original Issue Discount 8949 Sales and Other Dispositions of Capital Assets Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends Schedule D (Form 1040) Capital Gains and Losses W-8 Instructions for the Requester of Forms W-8BEN, W-8ECI, W-8EXP, and W-8IMY See How To Get Tax Help near the end of this publication for information about getting publications and forms. Volunteer income tax assistance Prev  Up  Next   Home   More Online Publications