Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Form 1099-DIV

What it is:

Financial institutions must create Form 1099-DIV for dividends and distributions of at least $10 in a tax year. Taxable dividend distributions from life insurance contracts and employee stock ownership plans are not subject to 1099-DIV reporting (they are reported using Form 1099-R). Substitute payments in lieu of dividends are also not reported on this form (they are reported on Form 1099-MISC). Dividend payments made to corporations, tax-exempt organizations, IRAs, Archer MSAs, health savings accounts, or government entities also do not count. Dividends paid to a 401(k) account will appear on the form (but that doesn't necessarily mean they're taxable). The rules for dividend reporting on real estate investments can be complicated; be sure to seek professional tax advice.

How it works (Example):

Let's say that John Doe has an account at Mutual Fund XYZ. The funds pay dividends of $1,500 per year. The mutual fund company creates and sends a Form 1099-DIV to John (and the IRS) reflecting his $1,500 of dividend income.

Why it Matters:

Form 1099-DIV is an IRS form used to report dividend income.
 

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