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How To Refile Your Taxes

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How To Refile Your Taxes

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The How To Refile Your Taxes

How to refile your taxes 8. How to refile your taxes   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. How to refile your taxes Reporting tax withheld. How to refile your taxes Nominees. How to refile your taxes Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. How to refile your taxes Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. How to refile your taxes Alternative minimum tax treatment. How to refile your taxes How To Report Dividend IncomeInvestment interest deducted. How to refile your taxes Reminder Foreign-source income. How to refile your taxes  If you are a U. How to refile your taxes S. How to refile your taxes citizen with dividend income from sources outside the United States (foreign-source income), you must report that income on your tax return unless it is exempt by U. How to refile your taxes S. How to refile your taxes law. How to refile your taxes This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. How to refile your taxes Introduction This chapter discusses the tax treatment of: Ordinary dividends, Capital gain distributions, Nondividend distributions, and Other distributions you may receive from a corporation or a mutual fund. How to refile your taxes This chapter also explains how to report dividend income on your tax return. How to refile your taxes Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. How to refile your taxes You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. How to refile your taxes However, some amounts you receive that are called dividends are actually interest income. How to refile your taxes (See Dividends that are actually interest under Taxable Interest in chapter 7. How to refile your taxes ) Most distributions are paid in cash (or check). How to refile your taxes However, distributions can consist of more stock, stock rights, other property, or services. How to refile your taxes Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 550 Investment Income and Expenses Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends General Information This section discusses general rules for dividend income. How to refile your taxes Tax on unearned income of certain children. How to refile your taxes   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. How to refile your taxes If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. How to refile your taxes If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. How to refile your taxes    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. How to refile your taxes Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. How to refile your taxes   For more information about the tax on unearned income of children and the parents' election, see chapter 31. How to refile your taxes Beneficiary of an estate or trust. How to refile your taxes    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. How to refile your taxes You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. How to refile your taxes , from the fiduciary. How to refile your taxes Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. How to refile your taxes Social security number (SSN) or individual taxpayer identification number (ITIN). How to refile your taxes    You must give your SSN or ITIN to any person required by federal tax law to make a return, statement, or other document that relates to you. How to refile your taxes This includes payers of dividends. How to refile your taxes If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. How to refile your taxes For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. How to refile your taxes Backup withholding. How to refile your taxes   Your dividend income is generally not subject to regular withholding. How to refile your taxes However, it may be subject to backup withholding to ensure that income tax is collected on the income. How to refile your taxes Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. How to refile your taxes   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. How to refile your taxes For more information, see Backup Withholding in chapter 4. How to refile your taxes Stock certificate in two or more names. How to refile your taxes   If two or more persons hold stock as joint tenants, tenants by the entirety, or tenants in common, each person's share of any dividends from the stock is determined by local law. How to refile your taxes Form 1099-DIV. How to refile your taxes   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. How to refile your taxes Keep this form with your records. How to refile your taxes You do not have to attach it to your tax return. How to refile your taxes Dividends not reported on Form 1099-DIV. How to refile your taxes   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. How to refile your taxes For example, you may receive distributive shares of dividends from partnerships or S corporations. How to refile your taxes These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. How to refile your taxes , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. How to refile your taxes Reporting tax withheld. How to refile your taxes   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. How to refile your taxes Nominees. How to refile your taxes   If someone receives distributions as a nominee for you, that person should give you a Form 1099-DIV, which will show distributions received on your behalf. How to refile your taxes Form 1099-MISC. How to refile your taxes   Certain substitute payments in lieu of dividends or tax-exempt interest received by a broker on your behalf must be reported to you on Form 1099-MISC, Miscellaneous Income, or a similar statement. How to refile your taxes See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. How to refile your taxes Incorrect amount shown on a Form 1099. How to refile your taxes   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. How to refile your taxes The new Form 1099 you receive will be marked “Corrected. How to refile your taxes ” Dividends on stock sold. How to refile your taxes   If stock is sold, exchanged, or otherwise disposed of after a dividend is declared but before it is paid, the owner of record (usually the payee shown on the dividend check) must include the dividend in income. How to refile your taxes Dividends received in January. How to refile your taxes   If a mutual fund (or other regulated investment company) or real estate investment trust (REIT) declares a dividend (including any exempt-interest dividend or capital gain distribution) in October, November, or December, payable to shareholders of record on a date in one of those months but actually pays the dividend during January of the next calendar year, you are considered to have received the dividend on December 31. How to refile your taxes You report the dividend in the year it was declared. How to refile your taxes Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. How to refile your taxes They are paid out of earnings and profits and are ordinary income to you. How to refile your taxes This means they are not capital gains. How to refile your taxes You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. How to refile your taxes Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. How to refile your taxes Qualified Dividends Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. How to refile your taxes They should be shown in box 1b of the Form 1099-DIV you receive. How to refile your taxes The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. How to refile your taxes 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. How to refile your taxes 6%. How to refile your taxes 20% on any amount that otherwise would be taxed at a 39. How to refile your taxes 6% rate. How to refile your taxes To qualify for the maximum rate, all of the following requirements must be met. How to refile your taxes The dividends must have been paid by a U. How to refile your taxes S. How to refile your taxes corporation or a qualified foreign corporation. How to refile your taxes (See Qualified foreign corporation , later. How to refile your taxes ) The dividends are not of the type listed later under Dividends that are not qualified dividends . How to refile your taxes You meet the holding period (discussed next). How to refile your taxes Holding period. How to refile your taxes   You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. How to refile your taxes The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. How to refile your taxes Instead, the seller will get the dividend. How to refile your taxes   When counting the number of days you held the stock, include the day you disposed of the stock, but not the day you acquired it. How to refile your taxes See the examples later. How to refile your taxes Exception for preferred stock. How to refile your taxes   In the case of preferred stock, you must have held the stock more than 90 days during the 181-day period that begins 90 days before the ex-dividend date if the dividends are due to periods totaling more than 366 days. How to refile your taxes If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. How to refile your taxes Example 1. How to refile your taxes You bought 5,000 shares of XYZ Corp. How to refile your taxes common stock on July 9, 2013. How to refile your taxes XYZ Corp. How to refile your taxes paid a cash dividend of 10 cents per share. How to refile your taxes The ex-dividend date was July 16, 2013. How to refile your taxes Your Form 1099-DIV from XYZ Corp. How to refile your taxes shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). How to refile your taxes However, you sold the 5,000 shares on August 12, 2013. How to refile your taxes You held your shares of XYZ Corp. How to refile your taxes for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). How to refile your taxes The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. How to refile your taxes You have no qualified dividends from XYZ Corp. How to refile your taxes because you held the XYZ stock for less than 61 days. How to refile your taxes Example 2. How to refile your taxes Assume the same facts as in Example 1 except that you bought the stock on July 15, 2013 (the day before the ex-dividend date), and you sold the stock on September 16, 2013. How to refile your taxes You held the stock for 63 days (from July 16, 2013, through September 16, 2013). How to refile your taxes The $500 of qualified dividends shown in box 1b of your Form 1099-DIV are all qualified dividends because you held the stock for 61 days of the 121-day period (from July 16, 2013, through September 14, 2013). How to refile your taxes Example 3. How to refile your taxes You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. How to refile your taxes ABC Mutual Fund paid a cash dividend of 10 cents a share. How to refile your taxes The ex-dividend date was July 16, 2013. How to refile your taxes The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. How to refile your taxes Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. How to refile your taxes However, you sold the 10,000 shares on August 12, 2013. How to refile your taxes You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. How to refile your taxes Holding period reduced where risk of loss is diminished. How to refile your taxes   When determining whether you met the minimum holding period discussed earlier, you cannot count any day during which you meet any of the following conditions. How to refile your taxes You had an option to sell, were under a contractual obligation to sell, or had made (and not closed) a short sale of substantially identical stock or securities. How to refile your taxes You were grantor (writer) of an option to buy substantially identical stock or securities. How to refile your taxes Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. How to refile your taxes   For information about how to apply condition (3), see Regulations section 1. How to refile your taxes 246-5. How to refile your taxes Qualified foreign corporation. How to refile your taxes   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. How to refile your taxes The corporation is incorporated in a U. How to refile your taxes S. How to refile your taxes possession. How to refile your taxes The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose and that includes an exchange of information program. How to refile your taxes For a list of those treaties, see Table 8-1. How to refile your taxes The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States. How to refile your taxes See Readily tradable stock , later. How to refile your taxes Exception. How to refile your taxes   A corporation is not a qualified foreign corporation if it is a passive foreign investment company during its tax year in which the dividends are paid or during its previous tax year. How to refile your taxes Readily tradable stock. How to refile your taxes   Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement (3) under Qualified foreign corporation , if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. How to refile your taxes For a list of the exchanges that meet these requirements, see www. How to refile your taxes sec. How to refile your taxes gov/divisions/marketreg/mrexchanges. How to refile your taxes shtml. How to refile your taxes Dividends that are not qualified dividends. How to refile your taxes   The following dividends are not qualified dividends. How to refile your taxes They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. How to refile your taxes Capital gain distributions. How to refile your taxes Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. How to refile your taxes S. How to refile your taxes building and loan associations, U. How to refile your taxes S. How to refile your taxes savings and loan associations, federal savings and loan associations, and similar financial institutions. How to refile your taxes (Report these amounts as interest income. How to refile your taxes ) Dividends from a corporation that is a tax-exempt organization or farmer's cooperative during the corporation's tax year in which the dividends were paid or during the corporation's previous tax year. How to refile your taxes Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation. How to refile your taxes Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. How to refile your taxes Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. How to refile your taxes Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. How to refile your taxes Table 8-1. How to refile your taxes Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. How to refile your taxes Australia Indonesia Romania Austria Ireland Russian Bangladesh Israel Federation Barbados Italy Slovak Belgium Jamaica Republic Bulgaria Japan Slovenia Canada Kazakhstan South Africa China Korea Spain Cyprus Latvia Sri Lanka Czech Lithuania Sweden Republic Luxembourg Switzerland Denmark Malta Thailand Egypt Mexico Trinidad and Estonia Morocco Tobago Finland Netherlands Tunisia France New Zealand Turkey Germany Norway Ukraine Greece Pakistan United Hungary Philippines Kingdom Iceland Poland Venezuela India Portugal     Dividends Used to Buy More Stock The corporation in which you own stock may have a dividend reinvestment plan. How to refile your taxes This plan lets you choose to use your dividends to buy (through an agent) more shares of stock in the corporation instead of receiving the dividends in cash. How to refile your taxes Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. How to refile your taxes If you use your dividends to buy more stock at a price equal to its fair market value, you still must report the dividends as income. How to refile your taxes If you are a member of a dividend reinvestment plan that lets you buy more stock at a price less than its fair market value, you must report as dividend income the fair market value of the additional stock on the dividend payment date. How to refile your taxes You also must report as dividend income any service charge subtracted from your cash dividends before the dividends are used to buy the additional stock. How to refile your taxes But you may be able to deduct the service charge. How to refile your taxes See chapter 28 for more information about deducting expenses of producing income. How to refile your taxes In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. How to refile your taxes If you choose to do this, you must report as dividend income the difference between the cash you invest and the fair market value of the stock you buy. How to refile your taxes When figuring this amount, use the fair market value of the stock on the dividend payment date. How to refile your taxes Money Market Funds Report amounts you receive from money market funds as dividend income. How to refile your taxes Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. How to refile your taxes Capital Gain Distributions Capital gain distributions (also called capital gain dividends) are paid to you or credited to your account by mutual funds (or other regulated investment companies) and real estate investment trusts (REITs). How to refile your taxes They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. How to refile your taxes Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. How to refile your taxes Undistributed capital gains of mutual funds and REITs. How to refile your taxes    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. How to refile your taxes You must treat your share of these gains as distributions, even though you did not actually receive them. How to refile your taxes However, they are not included on Form 1099-DIV. How to refile your taxes Instead, they are reported to you in box 1a of Form 2439. How to refile your taxes   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. How to refile your taxes   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. How to refile your taxes You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. How to refile your taxes Attach Copy B of Form 2439 to your return, and keep Copy C for your records. How to refile your taxes Basis adjustment. How to refile your taxes   Increase your basis in your mutual fund, or your interest in a REIT, by the difference between the gain you report and the credit you claim for the tax paid. How to refile your taxes Additional information. How to refile your taxes   For more information on the treatment of distributions from mutual funds, see Publication 550. How to refile your taxes Nondividend Distributions A nondividend distribution is a distribution that is not paid out of the earnings and profits of a corporation or a mutual fund. How to refile your taxes You should receive a Form 1099-DIV or other statement showing the nondividend distribution. How to refile your taxes On Form 1099-DIV, a nondividend distribution will be shown in box 3. How to refile your taxes If you do not receive such a statement, you report the distribution as an ordinary dividend. How to refile your taxes Basis adjustment. How to refile your taxes   A nondividend distribution reduces the basis of your stock. How to refile your taxes It is not taxed until your basis in the stock is fully recovered. How to refile your taxes This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. How to refile your taxes If you buy stock in a corporation in different lots at different times, and you cannot definitely identify the shares subject to the nondividend distribution, reduce the basis of your earliest purchases first. How to refile your taxes   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. How to refile your taxes Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. How to refile your taxes See Holding Period in chapter 14. How to refile your taxes Example. How to refile your taxes You bought stock in 2000 for $100. How to refile your taxes In 2003, you received a nondividend distribution of $80. How to refile your taxes You did not include this amount in your income, but you reduced the basis of your stock to $20. How to refile your taxes You received a nondividend distribution of $30 in 2013. How to refile your taxes The first $20 of this amount reduced your basis to zero. How to refile your taxes You report the other $10 as a long-term capital gain for 2013. How to refile your taxes You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. How to refile your taxes Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. How to refile your taxes These distributions are, at least in part, one form of a return of capital. How to refile your taxes They may be paid in one or more installments. How to refile your taxes You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. How to refile your taxes For more information on liquidating distributions, see chapter 1 of Publication 550. How to refile your taxes Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. How to refile your taxes Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. How to refile your taxes Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. How to refile your taxes Taxable stock dividends and stock rights. How to refile your taxes   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. How to refile your taxes You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. How to refile your taxes The distribution gives cash or other property to some shareholders and an increase in the percentage interest in the corporation's assets or earnings and profits to other shareholders. How to refile your taxes The distribution is in convertible preferred stock and has the same result as in (2). How to refile your taxes The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. How to refile your taxes The distribution is on preferred stock. How to refile your taxes (The distribution, however, is not taxable if it is an increase in the conversion ratio of convertible preferred stock made solely to take into account a stock dividend, stock split, or similar event that would otherwise result in reducing the conversion right. How to refile your taxes )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. How to refile your taxes If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. How to refile your taxes Preferred stock redeemable at a premium. How to refile your taxes   If you hold preferred stock having a redemption price higher than its issue price, the difference (the redemption premium) generally is taxable as a constructive distribution of additional stock on the preferred stock. How to refile your taxes For more information, see chapter 1 of Publication 550. How to refile your taxes Basis. How to refile your taxes   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. How to refile your taxes If you receive stock or stock rights that are not taxable to you, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550 for information on how to figure their basis. How to refile your taxes Fractional shares. How to refile your taxes    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. How to refile your taxes However, with the approval of the shareholders, the corporation may set up a plan in which fractional shares are not issued but instead are sold, and the cash proceeds are given to the shareholders. How to refile your taxes Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. How to refile your taxes Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. How to refile your taxes Enter your gain or loss, the difference between the cash you receive and the basis of the fractional shares sold, in column (h) of Schedule D (Form 1040) in Part I or Part II, whichever is appropriate. How to refile your taxes    Report these transactions on Form 8949 with the correct box checked. How to refile your taxes   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. How to refile your taxes Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). How to refile your taxes Example. How to refile your taxes You own one share of common stock that you bought on January 3, 2004, for $100. How to refile your taxes The corporation declared a common stock dividend of 5% on June 29, 2013. How to refile your taxes The fair market value of the stock at the time the stock dividend was declared was $200. How to refile your taxes You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. How to refile your taxes You figure your gain or loss as follows: Fair market value of old stock $200. How to refile your taxes 00 Fair market value of stock dividend (cash received) +10. How to refile your taxes 00 Fair market value of old stock and stock dividend $210. How to refile your taxes 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. How to refile your taxes 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. How to refile your taxes 76 Total $100. How to refile your taxes 00 Cash received $10. How to refile your taxes 00 Basis (cost) of stock dividend − 4. How to refile your taxes 76 Gain $5. How to refile your taxes 24 Because you had held the share of stock for more than 1 year at the time the stock dividend was declared, your gain on the stock dividend is a long-term capital gain. How to refile your taxes Scrip dividends. How to refile your taxes   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. How to refile your taxes The certificate is generally nontaxable when you receive it. How to refile your taxes If you choose to have the corporation sell the certificate for you and give you the proceeds, your gain or loss is the difference between the proceeds and the portion of your basis in the corporation's stock allocated to the certificate. How to refile your taxes   However, if you receive a scrip certificate that you can choose to redeem for cash instead of stock, the certificate is taxable when you receive it. How to refile your taxes You must include its fair market value in income on the date you receive it. How to refile your taxes Other Distributions You may receive any of the following distributions during the year. How to refile your taxes Exempt-interest dividends. How to refile your taxes   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. How to refile your taxes Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. How to refile your taxes Information reporting requirement. How to refile your taxes   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. How to refile your taxes This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. How to refile your taxes Alternative minimum tax treatment. How to refile your taxes   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. How to refile your taxes See Alternative Minimum Tax (AMT) in chapter 30 for more information. How to refile your taxes Dividends on insurance policies. How to refile your taxes    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. How to refile your taxes However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. How to refile your taxes    If dividends on an insurance contract (other than a modified endowment contract) are distributed to you, they are a partial return of the premiums you paid. How to refile your taxes Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. How to refile your taxes Report any taxable distributions on insurance policies on Form 1040, line 21. How to refile your taxes Dividends on veterans' insurance. How to refile your taxes   Dividends you receive on veterans' insurance policies are not taxable. How to refile your taxes In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. How to refile your taxes Patronage dividends. How to refile your taxes   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. How to refile your taxes   Do not include in your income patronage dividends you receive on: Property bought for your personal use, or Capital assets or depreciable property bought for use in your business. How to refile your taxes But you must reduce the basis (cost) of the items bought. How to refile your taxes If the dividend is more than the adjusted basis of the assets, you must report the excess as income. How to refile your taxes   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. How to refile your taxes Alaska Permanent Fund dividends. How to refile your taxes    Do not report these amounts as dividends. How to refile your taxes Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. How to refile your taxes How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. How to refile your taxes Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. How to refile your taxes Report qualified dividends on line 9b of Form 1040 or Form 1040A. How to refile your taxes If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. How to refile your taxes See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. How to refile your taxes If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. How to refile your taxes You cannot use Form 1040EZ if you receive any dividend income. How to refile your taxes Form 1099-DIV. How to refile your taxes   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. How to refile your taxes Even if you do not receive Form 1099-DIV, you must report all your dividend income. How to refile your taxes   See Form 1099-DIV for more information on how to report dividend income. How to refile your taxes Form 1040A or 1040. How to refile your taxes    You must complete Schedule B (Form 1040A or 1040), Part II, and attach it to your Form 1040A or 1040, if: Your ordinary dividends (Form 1099-DIV, box 1a) are more than $1,500, or You received, as a nominee, dividends that actually belong to someone else. How to refile your taxes If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. How to refile your taxes   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. How to refile your taxes If your securities are held by a brokerage firm (in “street name”), list the name of the brokerage firm shown on Form 1099-DIV as the payer. How to refile your taxes If your stock is held by a nominee who is the owner of record, and the nominee credited or paid you dividends on the stock, show the name of the nominee and the dividends you received or for which you were credited. How to refile your taxes   Enter on line 6 the total of the amounts listed on line 5. How to refile your taxes Also enter this total on line 9a of Form 1040A or 1040. How to refile your taxes Qualified dividends. How to refile your taxes   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. How to refile your taxes The amount in box 1b is already included in box 1a. How to refile your taxes Do not add the amount in box 1b to, or substract it from, the amount in box 1a. How to refile your taxes   Do not include any of the following on line 9b. How to refile your taxes Qualified dividends you received as a nominee. How to refile your taxes See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. How to refile your taxes Dividends on stock for which you did not meet the holding period. How to refile your taxes See Holding period , earlier under Qualified Dividends. How to refile your taxes Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. How to refile your taxes Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. How to refile your taxes Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. How to refile your taxes   If you have qualified dividends, you must figure your tax by completing the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 or 1040A instructions or the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions, whichever applies. How to refile your taxes Enter qualified dividends on line 2 of the worksheet. How to refile your taxes Investment interest deducted. How to refile your taxes   If you claim a deduction for investment interest, you may have to reduce the amount of your qualified dividends that are eligible for the 0%, 15%, or 20% tax rate. How to refile your taxes Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. How to refile your taxes This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. How to refile your taxes For more information about the limit on investment interest, see Investment expenses in chapter 23. How to refile your taxes Expenses related to dividend income. How to refile your taxes   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). How to refile your taxes See chapter 28 for general information about deducting expenses of producing income. How to refile your taxes More information. How to refile your taxes    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. How to refile your taxes Prev  Up  Next   Home   More Online Publications