The 1099-DIV form reports dividend income and capital gains distributions from investments. It is an important tax form that helps taxpayers document investment income to report on their tax return. Specifically, the 1099-DIV reports:
- Total ordinary dividends paid to an investor from stocks or mutual funds. This includes dividends reinvested.
- Qualified dividends that may be taxed at a lower rate.
- Total capital gains distributions paid. This is the investor’s share of realized gains from sales of securities within the fund.
- Any federal income tax withheld.
- Foreign tax paid on dividends.
- Whether dividends are from U.S. government obligations exempt from state tax.
1099-DIV Due Date
Financial institutions send a 1099-DIV to investors by January 31st reflecting the prior year’s distributions. Investors must report this info on Schedule B of IRS Form 1040. The totals determine how much tax is owed on investment income.
How to file 1099-DIV
Here are the steps a payor (financial institution, company, etc.) should follow to file Form 1099-DIV:
- Gather tax information – Collect the name, address, SSN/EIN, account numbers, and income details for everyone who received dividends or capital gains distributions.
- Prepare 1099-DIV forms – Fill out a 1099-DIV for each recipient. Double check for accuracy. List total ordinary/qualified dividends, capital gains, and any withholding.
- Mail copies to recipients – Provide a completed 1099-DIV copy to each recipient by January 31st. This informs them of the income to report.
- File with the IRS – Transmit all recipient 1099-DIV forms to the IRS by February 28th (paper) or March 31st (electronically). Use 1099 transmittal Form 1096.
- Send to state tax department – If required, send state copies of the 1099-DIV to the appropriate state agency based on state due dates.
- Retain records – Keep payor copies of 1099-DIV forms on file for a minimum of 4 years for tax purposes.
- Issue corrected – 1099-DIV File a new 1099-DIV form if you identify any recipient information or income reporting errors after the original filing.
1099-DIV Form Boxes
- Payer name, address, federal ID number: Identifies the financial institution or payer providing the 1099-DIV.
- Recipient name, address, SSN/EIN: Identifies the taxpayer receiving the reported dividends/capital gains.
- Account number: Lists the recipient’s account associated with the income (if applicable).
- Box 1a – Total ordinary dividends: The total regular dividends paid to the recipient.
- Box 1b – Qualified dividends: Portion of box 1a dividends that qualify for special tax rates.
- Box 2a – Total capital gain distributions: Long-term capital gains paid from mutual funds and REITs.
- Box 3 – Non-dividend distributions: Return of capital payments that lower the cost basis.
- Box 4 – Federal income tax withheld: Any backup withholding deducted from payments.
- Box 5 – Investment expenses: Fees deducted directly from investments.
- Box 6 – Foreign tax paid: Foreign taxes paid on dividends.
- Box 7 – Foreign country or U.S. possession: Where foreign taxes were paid.
- Box 8 – Cash liquidation distributions: Payments from corporate liquidations.
