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Www irs gov e file 8. Www irs gov e file   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. Www irs gov e file Reporting tax withheld. Www irs gov e file Nominees. Www irs gov e file Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. Www irs gov e file Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. Www irs gov e file Alternative minimum tax treatment. Www irs gov e file How To Report Dividend IncomeInvestment interest deducted. Www irs gov e file Reminder Foreign-source income. Www irs gov e file  If you are a U. Www irs gov e file S. Www irs gov e file 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. Www irs gov e file S. Www irs gov e file law. Www irs gov e file 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. Www irs gov e file 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. Www irs gov e file This chapter also explains how to report dividend income on your tax return. Www irs gov e file Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. Www irs gov e file You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. Www irs gov e file However, some amounts you receive that are called dividends are actually interest income. Www irs gov e file (See Dividends that are actually interest under Taxable Interest in chapter 7. Www irs gov e file ) Most distributions are paid in cash (or check). Www irs gov e file However, distributions can consist of more stock, stock rights, other property, or services. Www irs gov e file 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. Www irs gov e file Tax on unearned income of certain children. Www irs gov e file   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Www irs gov e file If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. Www irs gov e file If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Www irs gov e file    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Www irs gov e file Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. Www irs gov e file   For more information about the tax on unearned income of children and the parents' election, see chapter 31. Www irs gov e file Beneficiary of an estate or trust. Www irs gov e file    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. Www irs gov e file You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Www irs gov e file , from the fiduciary. Www irs gov e file Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Www irs gov e file Social security number (SSN) or individual taxpayer identification number (ITIN). Www irs gov e file    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. Www irs gov e file This includes payers of dividends. Www irs gov e file If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. Www irs gov e file For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. Www irs gov e file Backup withholding. Www irs gov e file   Your dividend income is generally not subject to regular withholding. Www irs gov e file However, it may be subject to backup withholding to ensure that income tax is collected on the income. Www irs gov e file Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Www irs gov e file   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. Www irs gov e file For more information, see Backup Withholding in chapter 4. Www irs gov e file Stock certificate in two or more names. Www irs gov e file   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. Www irs gov e file Form 1099-DIV. Www irs gov e file   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. Www irs gov e file Keep this form with your records. Www irs gov e file You do not have to attach it to your tax return. Www irs gov e file Dividends not reported on Form 1099-DIV. Www irs gov e file   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. Www irs gov e file For example, you may receive distributive shares of dividends from partnerships or S corporations. Www irs gov e file These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Www irs gov e file , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Www irs gov e file Reporting tax withheld. Www irs gov e file   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. Www irs gov e file Nominees. Www irs gov e file   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. Www irs gov e file Form 1099-MISC. Www irs gov e file   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. Www irs gov e file See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. Www irs gov e file Incorrect amount shown on a Form 1099. Www irs gov e file   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Www irs gov e file The new Form 1099 you receive will be marked “Corrected. Www irs gov e file ” Dividends on stock sold. Www irs gov e file   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. Www irs gov e file Dividends received in January. Www irs gov e file   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. Www irs gov e file You report the dividend in the year it was declared. Www irs gov e file Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. Www irs gov e file They are paid out of earnings and profits and are ordinary income to you. Www irs gov e file This means they are not capital gains. Www irs gov e file 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. Www irs gov e file Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. Www irs gov e file 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. Www irs gov e file They should be shown in box 1b of the Form 1099-DIV you receive. Www irs gov e file The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. Www irs gov e file 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. Www irs gov e file 6%. Www irs gov e file 20% on any amount that otherwise would be taxed at a 39. Www irs gov e file 6% rate. Www irs gov e file To qualify for the maximum rate, all of the following requirements must be met. Www irs gov e file The dividends must have been paid by a U. Www irs gov e file S. Www irs gov e file corporation or a qualified foreign corporation. Www irs gov e file (See Qualified foreign corporation , later. Www irs gov e file ) The dividends are not of the type listed later under Dividends that are not qualified dividends . Www irs gov e file You meet the holding period (discussed next). Www irs gov e file Holding period. Www irs gov e file   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. Www irs gov e file 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. Www irs gov e file Instead, the seller will get the dividend. Www irs gov e file   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. Www irs gov e file See the examples later. Www irs gov e file Exception for preferred stock. Www irs gov e file   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. Www irs gov e file If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. Www irs gov e file Example 1. Www irs gov e file You bought 5,000 shares of XYZ Corp. Www irs gov e file common stock on July 9, 2013. Www irs gov e file XYZ Corp. Www irs gov e file paid a cash dividend of 10 cents per share. Www irs gov e file The ex-dividend date was July 16, 2013. Www irs gov e file Your Form 1099-DIV from XYZ Corp. Www irs gov e file shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). Www irs gov e file However, you sold the 5,000 shares on August 12, 2013. Www irs gov e file You held your shares of XYZ Corp. Www irs gov e file for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). Www irs gov e file The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. Www irs gov e file You have no qualified dividends from XYZ Corp. Www irs gov e file because you held the XYZ stock for less than 61 days. Www irs gov e file Example 2. Www irs gov e file 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. Www irs gov e file You held the stock for 63 days (from July 16, 2013, through September 16, 2013). Www irs gov e file 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). Www irs gov e file Example 3. Www irs gov e file You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. Www irs gov e file ABC Mutual Fund paid a cash dividend of 10 cents a share. Www irs gov e file The ex-dividend date was July 16, 2013. Www irs gov e file The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. Www irs gov e file Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. Www irs gov e file However, you sold the 10,000 shares on August 12, 2013. Www irs gov e file You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. Www irs gov e file Holding period reduced where risk of loss is diminished. Www irs gov e file   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. Www irs gov e file 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. Www irs gov e file You were grantor (writer) of an option to buy substantially identical stock or securities. Www irs gov e file Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. Www irs gov e file   For information about how to apply condition (3), see Regulations section 1. Www irs gov e file 246-5. Www irs gov e file Qualified foreign corporation. Www irs gov e file   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. Www irs gov e file The corporation is incorporated in a U. Www irs gov e file S. Www irs gov e file possession. Www irs gov e file 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. Www irs gov e file For a list of those treaties, see Table 8-1. Www irs gov e file 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. Www irs gov e file See Readily tradable stock , later. Www irs gov e file Exception. Www irs gov e file   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. Www irs gov e file Readily tradable stock. Www irs gov e file   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. Www irs gov e file For a list of the exchanges that meet these requirements, see www. Www irs gov e file sec. Www irs gov e file gov/divisions/marketreg/mrexchanges. Www irs gov e file shtml. Www irs gov e file Dividends that are not qualified dividends. Www irs gov e file   The following dividends are not qualified dividends. Www irs gov e file They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. Www irs gov e file Capital gain distributions. Www irs gov e file Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. Www irs gov e file S. Www irs gov e file building and loan associations, U. Www irs gov e file S. Www irs gov e file savings and loan associations, federal savings and loan associations, and similar financial institutions. Www irs gov e file (Report these amounts as interest income. Www irs gov e file ) 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. Www irs gov e file 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. Www irs gov e file 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. Www irs gov e file Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Www irs gov e file 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. Www irs gov e file Table 8-1. Www irs gov e file Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. Www irs gov e file 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. Www irs gov e file 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. Www irs gov e file Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. Www irs gov e file 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. Www irs gov e file 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. Www irs gov e file 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. Www irs gov e file But you may be able to deduct the service charge. Www irs gov e file See chapter 28 for more information about deducting expenses of producing income. Www irs gov e file In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. Www irs gov e file 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. Www irs gov e file When figuring this amount, use the fair market value of the stock on the dividend payment date. Www irs gov e file Money Market Funds Report amounts you receive from money market funds as dividend income. Www irs gov e file Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. Www irs gov e file 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). Www irs gov e file They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. Www irs gov e file Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. Www irs gov e file Undistributed capital gains of mutual funds and REITs. Www irs gov e file    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. Www irs gov e file You must treat your share of these gains as distributions, even though you did not actually receive them. Www irs gov e file However, they are not included on Form 1099-DIV. Www irs gov e file Instead, they are reported to you in box 1a of Form 2439. Www irs gov e file   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. Www irs gov e file   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. Www irs gov e file You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. Www irs gov e file Attach Copy B of Form 2439 to your return, and keep Copy C for your records. Www irs gov e file Basis adjustment. Www irs gov e file   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. Www irs gov e file Additional information. Www irs gov e file   For more information on the treatment of distributions from mutual funds, see Publication 550. Www irs gov e file 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. Www irs gov e file You should receive a Form 1099-DIV or other statement showing the nondividend distribution. Www irs gov e file On Form 1099-DIV, a nondividend distribution will be shown in box 3. Www irs gov e file If you do not receive such a statement, you report the distribution as an ordinary dividend. Www irs gov e file Basis adjustment. Www irs gov e file   A nondividend distribution reduces the basis of your stock. Www irs gov e file It is not taxed until your basis in the stock is fully recovered. Www irs gov e file This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. Www irs gov e file 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. Www irs gov e file   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. Www irs gov e file Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. Www irs gov e file See Holding Period in chapter 14. Www irs gov e file Example. Www irs gov e file You bought stock in 2000 for $100. Www irs gov e file In 2003, you received a nondividend distribution of $80. Www irs gov e file You did not include this amount in your income, but you reduced the basis of your stock to $20. Www irs gov e file You received a nondividend distribution of $30 in 2013. Www irs gov e file The first $20 of this amount reduced your basis to zero. Www irs gov e file You report the other $10 as a long-term capital gain for 2013. Www irs gov e file You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. Www irs gov e file Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. Www irs gov e file These distributions are, at least in part, one form of a return of capital. Www irs gov e file They may be paid in one or more installments. Www irs gov e file You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. Www irs gov e file For more information on liquidating distributions, see chapter 1 of Publication 550. Www irs gov e file Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. Www irs gov e file Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. Www irs gov e file Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. Www irs gov e file Taxable stock dividends and stock rights. Www irs gov e file   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. Www irs gov e file You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. Www irs gov e file 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. Www irs gov e file The distribution is in convertible preferred stock and has the same result as in (2). Www irs gov e file The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. Www irs gov e file The distribution is on preferred stock. Www irs gov e file (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. Www irs gov e file )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. Www irs gov e file If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. Www irs gov e file Preferred stock redeemable at a premium. Www irs gov e file   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. Www irs gov e file For more information, see chapter 1 of Publication 550. Www irs gov e file Basis. Www irs gov e file   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. Www irs gov e file 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. Www irs gov e file Fractional shares. Www irs gov e file    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. Www irs gov e file 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. Www irs gov e file Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. Www irs gov e file Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. Www irs gov e file 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. Www irs gov e file    Report these transactions on Form 8949 with the correct box checked. Www irs gov e file   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. Www irs gov e file Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). Www irs gov e file Example. Www irs gov e file You own one share of common stock that you bought on January 3, 2004, for $100. Www irs gov e file The corporation declared a common stock dividend of 5% on June 29, 2013. Www irs gov e file The fair market value of the stock at the time the stock dividend was declared was $200. Www irs gov e file You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. Www irs gov e file You figure your gain or loss as follows: Fair market value of old stock $200. Www irs gov e file 00 Fair market value of stock dividend (cash received) +10. Www irs gov e file 00 Fair market value of old stock and stock dividend $210. Www irs gov e file 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. Www irs gov e file 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. Www irs gov e file 76 Total $100. Www irs gov e file 00 Cash received $10. Www irs gov e file 00 Basis (cost) of stock dividend − 4. Www irs gov e file 76 Gain $5. Www irs gov e file 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. Www irs gov e file Scrip dividends. Www irs gov e file   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. Www irs gov e file The certificate is generally nontaxable when you receive it. Www irs gov e file 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. Www irs gov e file   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. Www irs gov e file You must include its fair market value in income on the date you receive it. Www irs gov e file Other Distributions You may receive any of the following distributions during the year. Www irs gov e file Exempt-interest dividends. Www irs gov e file   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. Www irs gov e file Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Www irs gov e file Information reporting requirement. Www irs gov e file   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. Www irs gov e file This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. Www irs gov e file Alternative minimum tax treatment. Www irs gov e file   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Www irs gov e file See Alternative Minimum Tax (AMT) in chapter 30 for more information. Www irs gov e file Dividends on insurance policies. Www irs gov e file    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. Www irs gov e file However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. Www irs gov e file    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. Www irs gov e file Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. Www irs gov e file Report any taxable distributions on insurance policies on Form 1040, line 21. Www irs gov e file Dividends on veterans' insurance. Www irs gov e file   Dividends you receive on veterans' insurance policies are not taxable. Www irs gov e file In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. Www irs gov e file Patronage dividends. Www irs gov e file   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. Www irs gov e file   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. Www irs gov e file But you must reduce the basis (cost) of the items bought. Www irs gov e file If the dividend is more than the adjusted basis of the assets, you must report the excess as income. Www irs gov e file   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. Www irs gov e file Alaska Permanent Fund dividends. Www irs gov e file    Do not report these amounts as dividends. Www irs gov e file Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. Www irs gov e file How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. Www irs gov e file Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. Www irs gov e file Report qualified dividends on line 9b of Form 1040 or Form 1040A. Www irs gov e file If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. Www irs gov e file See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. Www irs gov e file If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. Www irs gov e file You cannot use Form 1040EZ if you receive any dividend income. Www irs gov e file Form 1099-DIV. Www irs gov e file   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. Www irs gov e file Even if you do not receive Form 1099-DIV, you must report all your dividend income. Www irs gov e file   See Form 1099-DIV for more information on how to report dividend income. Www irs gov e file Form 1040A or 1040. Www irs gov e file    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. Www irs gov e file If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. Www irs gov e file   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. Www irs gov e file 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. Www irs gov e file 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. Www irs gov e file   Enter on line 6 the total of the amounts listed on line 5. Www irs gov e file Also enter this total on line 9a of Form 1040A or 1040. Www irs gov e file Qualified dividends. Www irs gov e file   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. Www irs gov e file The amount in box 1b is already included in box 1a. Www irs gov e file Do not add the amount in box 1b to, or substract it from, the amount in box 1a. Www irs gov e file   Do not include any of the following on line 9b. Www irs gov e file Qualified dividends you received as a nominee. Www irs gov e file See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. Www irs gov e file Dividends on stock for which you did not meet the holding period. Www irs gov e file See Holding period , earlier under Qualified Dividends. Www irs gov e file 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. Www irs gov e file Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Www irs gov e file 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. Www irs gov e file   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. Www irs gov e file Enter qualified dividends on line 2 of the worksheet. Www irs gov e file Investment interest deducted. Www irs gov e file   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. Www irs gov e file Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. Www irs gov e file This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. Www irs gov e file For more information about the limit on investment interest, see Investment expenses in chapter 23. Www irs gov e file Expenses related to dividend income. Www irs gov e file   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). Www irs gov e file See chapter 28 for general information about deducting expenses of producing income. Www irs gov e file More information. Www irs gov e file    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. Www irs gov e file Prev  Up  Next   Home   More Online Publications
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Www irs gov e file Index A Adoption Taxpayer identification number, Adoption taxpayer identification number (ATIN). Www irs gov e file Aliens, Individual taxpayer identification number (ITIN) for aliens. Www irs gov e file Alternative minimum tax (AMT), Limit on credit. Www irs gov e file Amount of credit, Amount of Credit, Payments for prior year's expenses. Www irs gov e file Limit on, Limit on credit. Www irs gov e file Assistance (see Tax help) C Calculation of credit, How To Figure the Credit, Payments for prior year's expenses. Www irs gov e file Camp, overnight, Camp. Www irs gov e file Care Dependent care benefits, Dependent care benefits. Www irs gov e file , Dependent care benefits. Www irs gov e file Employer-provided benefits, Dependent Care Benefits Outside home, Care outside your home. Www irs gov e file Provider identification, Provider Identification Test Qualifying person, Care of a Qualifying Person Children Divorced or separated parents, Child of divorced or separated parents or parents living apart. Www irs gov e file Physically or mentally disabled, Qualifying Person Test Under age 13, Qualifying Person Test Work-related expense payments to relatives, Payments to Relatives or Dependents Church employee, Clergy or church employee. Www irs gov e file Claiming of credit, How To Claim the Credit Tests to claim credit, Tests To Claim the Credit Clergy, Clergy or church employee. Www irs gov e file Community property, Community property laws. Www irs gov e file D Death of spouse, Death of spouse. Www irs gov e file Dependent care benefits, Dependent care benefits. Www irs gov e file , Dependent Care Benefits Dependent care centers, Dependent care center. Www irs gov e file Dependent defined, Dependent defined. Www irs gov e file Dependents (see Qualifying person test) Deposits, Fees and deposits. Www irs gov e file Disabilities, persons with Dependents, Qualifying Person Test Physically or mentally not able to care for self, Physically or mentally not able to care for oneself. Www irs gov e file Spouse, Qualifying Person Test, Rule for student-spouse or spouse not able to care for self. Www irs gov e file , Working or Looking for Work, You or your spouse is a student or not able to care for self. Www irs gov e file Divorced parents, Child of divorced or separated parents or parents living apart. Www irs gov e file Dollar limit, Dollar Limit, Yearly limit. Www irs gov e file Reduced dollar limit, Tests To Claim the Credit, Reduced Dollar Limit Domestic help, Housekeeper. Www irs gov e file Due diligence, Due diligence. Www irs gov e file E Earned income Dependent care benefits, Exclusion or deduction. Www irs gov e file For figuring credit, Earned Income Test Limit on, Earned Income Limit Net loss, Net loss. Www irs gov e file Nonworking spouse, Rule for student-spouse or spouse not able to care for self. Www irs gov e file Self-employment earnings, Self-employment earnings. Www irs gov e file Statutory employees, Statutory employee. Www irs gov e file What is not, What is not earned income? Earned income test, Earned Income Test, Full-time student. Www irs gov e file Determination, Tests To Claim the Credit Education expenses, Education. Www irs gov e file Employer-provided dependent care benefits, Dependent care benefits. Www irs gov e file , Dependent Care Benefits Employment taxes, Reminders, Taxes paid on wages. Www irs gov e file , How To Claim the Credit Exclusion from income Employer-provided dependent care benefits, Dependent care benefits. Www irs gov e file , Exclusion or deduction. Www irs gov e file Expenses, How To Figure the Credit (see also Work-related expenses) 2012 expenses paid in 2013 (Worksheet A), Worksheet A. Www irs gov e file Worksheet for 2012 Expenses Paid in 2013 Education, Education. Www irs gov e file Medical, Medical expenses. Www irs gov e file Not for care, Expenses not for care. Www irs gov e file Prepaid, Expenses prepaid in an earlier year. Www irs gov e file Reimbursed, Expenses reimbursed. Www irs gov e file F Fees, Fees and deposits. Www irs gov e file Figures, Tests To Claim the Credit Figuring credit, How To Figure the Credit, Payments for prior year's expenses. Www irs gov e file Earned income, Earned income. Www irs gov e file Filing status Joint return test, Joint Return Test Tests to claim credit, Tests To Claim the Credit Form 1040 Claiming the credit, Tests To Claim the Credit, Form 1040, Form 1040A, or Form 1040NR. Www irs gov e file Form 1040A Claiming the credit, Tests To Claim the Credit Form 2441, Form 1040, Form 1040A, or Form 1040NR. Www irs gov e file Form 4029, Members of certain religious faiths opposed to social security. Www irs gov e file , Form 4029. Www irs gov e file Form 4361, Members of certain religious faiths opposed to social security. Www irs gov e file , Form 4361. Www irs gov e file Form W-10, Getting the information. Www irs gov e file Form W-2 Dependent care benefits, Statement for employee. Www irs gov e file Form W-7, Individual taxpayer identification number (ITIN) for aliens. Www irs gov e file Free tax services, Free help with your tax return. Www irs gov e file H Help (see Tax help) Household services, Care of a Qualifying Person, Household Services, Meals and lodging provided for housekeeper. Www irs gov e file Employment taxes, How To Claim the Credit Housekeepers, Housekeeper. Www irs gov e file I Identification of provider, Provider Identification Test, Provider refusal. Www irs gov e file Individual taxpayer identification numbers (ITINs) For aliens, Individual taxpayer identification number (ITIN) for aliens. Www irs gov e file Inmate, What is not earned income? J Joint return test, Joint Return Test, Costs of keeping up a home. Www irs gov e file Tests to claim credit, Tests To Claim the Credit L Limits Amount of credit, Limit on credit. Www irs gov e file Dollar, Dollar Limit Earned income, Earned Income Limit Reduced dollar, Tests To Claim the Credit, Reduced Dollar Limit Looking for work, Working or Looking for Work Losses, Net loss. Www irs gov e file M Married and living apart, Married and living apart. Www irs gov e file Meals and lodging for housekeeper, Meals and lodging provided for housekeeper. Www irs gov e file Medical expenses, Medical expenses. Www irs gov e file Minister, Clergy or church employee. Www irs gov e file Missing children, photographs of, Reminders N Nonrefundability of credit, Tax credit not refundable. Www irs gov e file Not able to care for self Qualifying person test, Physically or mentally not able to care for oneself. Www irs gov e file Spouse, Qualifying Person Test, Rule for student-spouse or spouse not able to care for self. Www irs gov e file , Working or Looking for Work, You or your spouse is a student or not able to care for self. Www irs gov e file O Outside of home care, Care outside your home. Www irs gov e file P Part of year Persons qualifying for, Person qualifying for part of year. Www irs gov e file Work or looking for work, Work for part of year. Www irs gov e file Part-time work, Part-time work. Www irs gov e file Prepaid expenses, Expenses prepaid in an earlier year. Www irs gov e file Prisoner, What is not earned income? Provider identification test, Tests To Claim the Credit, Provider Identification Test, Provider refusal. Www irs gov e file Publications (see Tax help) Q Qualifying child, Qualifying child. Www irs gov e file Qualifying person Care for, Care of a Qualifying Person Expenses not for care, Expenses not for care. Www irs gov e file Qualifying person test, Qualifying Person Test, Child of divorced or separated parents or parents living apart. Www irs gov e file Tests to claim credit, Tests To Claim the Credit R Recordkeeping requirements, How To Claim the Credit Reduced dollar limit, Reduced Dollar Limit Tests to claim credit, Tests To Claim the Credit Refusal by provider to give information, Provider refusal. Www irs gov e file Reimbursed expenses, Expenses reimbursed. Www irs gov e file Relatives, payments to, Tests To Claim the Credit, Payments to Relatives or Dependents Religious faiths opposed to social security programs, Members of certain religious faiths opposed to social security. Www irs gov e file S School expenses, Education. Www irs gov e file Self-employed persons, Self-employment earnings. Www irs gov e file Separated parents, Child of divorced or separated parents or parents living apart. Www irs gov e file , Legally separated. Www irs gov e file Separated spouse, Separated spouse. Www irs gov e file Sick days, Temporary absence from work. Www irs gov e file Social Security, Employment Taxes for Household Employers (see also Employment taxes) Religious faiths opposed to, Members of certain religious faiths opposed to social security. Www irs gov e file Social security numbers, Information needed. Www irs gov e file Spouse Both spouses qualifying, Both spouses qualify. Www irs gov e file Death of, Death of spouse. Www irs gov e file Nonworking, earned income, Rule for student-spouse or spouse not able to care for self. Www irs gov e file Not able to care for self, Qualifying Person Test, Rule for student-spouse or spouse not able to care for self. Www irs gov e file , Working or Looking for Work, You or your spouse is a student or not able to care for self. Www irs gov e file Qualifying person, Qualifying Person Test Separated, Separated spouse. Www irs gov e file Student, Rule for student-spouse or spouse not able to care for self. Www irs gov e file , You or your spouse is a student or not able to care for self. Www irs gov e file Surviving, Surviving spouse. Www irs gov e file Working, Spouse works. Www irs gov e file Students Full-time, Full-time student. Www irs gov e file Spouse, Rule for student-spouse or spouse not able to care for self. Www irs gov e file , You or your spouse is a student or not able to care for self. Www irs gov e file T Tax help, How To Get Tax Help Taxes on wages (see Employment taxes) Taxpayer identification number (TINs), Reminders, Taxpayer identification number. Www irs gov e file Adoption, Adoption taxpayer identification number (ATIN). Www irs gov e file Aliens, Individual taxpayer identification number (ITIN) for aliens. Www irs gov e file Providers, Information needed. Www irs gov e file Temporary absence, Temporary absence from work. Www irs gov e file Tests to claim credit, Tests To Claim the Credit, Exclusion or deduction. Www irs gov e file Determination, Tests To Claim the Credit Earned income, Earned Income Test Qualifying persons, Qualifying Person Test Work-related expenses, Work-Related Expense Test Transportation, Transportation. Www irs gov e file TTY/TDD information, How To Get Tax Help U Unearned income, What is not earned income? V Vacation, Temporary absence from work. Www irs gov e file Volunteer work, Volunteer work. Www irs gov e file W Wages, taxes on (see Employment taxes) Withholding Federal income tax, Employment Taxes for Household Employers Work-related expense test, Work-Related Expense Test, Payments to Relatives or Dependents Partly work-related expenses, Expenses partly work-related. Www irs gov e file Tests to claim credit, Tests To Claim the Credit Work-related expenses Earned income limit, Earned Income Limit Figuring of credit, Figuring Total Work-Related Expenses Medical, Medical expenses. Www irs gov e file Paid following year, Expenses not paid until the following year. Www irs gov e file , Payments for prior year's expenses. Www irs gov e file , Worksheet A. Www irs gov e file Worksheet for 2012 Expenses Paid in 2013 Partly work-related expenses, Expenses partly work-related. Www irs gov e file Prepaid, Expenses prepaid in an earlier year. Www irs gov e file Recordkeeping, How To Claim the Credit Reimbursed, Expenses reimbursed. Www irs gov e file Worksheets 2012 expenses paid in 2013 (Worksheet A), Worksheet A. Www irs gov e file Worksheet for 2012 Expenses Paid in 2013 Prev  Up     Home   More Online Publications