Form 1099-DIV is used to report dividends and certain other distributions to investors.
Dividends are distributions of property by a corporation to the shareholder or owner of the corporation out of the earnings or profits of the corporation. Dividends are typically paid in the form of cash but may be paid in other types of property.
Certain dividends are classified as Qualified Dividends and taxed at lower capital gains tax rates. Otherwise, dividends that are not classified as Qualified Dividends are by default classified as Ordinary Dividends and are taxed as ordinary income.
Each box of the Form 1099-DIV contains information that the taxpayer may need to complete their tax return.
Box 1a contains the Ordinary Dividends. Ordinary Dividends are reported on Form 1040, Line 3b. The portion of Ordinary Dividends that are considered to be Qualified Dividends are taxed at the lower capital gain rates. Any Ordinary Dividends that are not considered to be Qualified Dividends are taxed as ordinary income.
Box 1b contains the portion of Box 1a that are Qualified Dividends. Qualified Dividends are reported on Form 1040, Line 3a. Also reported in this box are dividends paid to a participant or beneficiary of an employee stock ownership plan (ESOP) which are reported as Qualified Dividends on Form 1040, but are not considered investment income for any other purposes.
Box 2a contains the Total Capital Gain Distributions from a regulated investment company (such as a publicly traded company) or a real estate investment trust (REIT). This amount is reported on Schedule D (Form 1040), Line 13 and it includes the amounts that are also reported in Boxes 2b, 2c and 2d.
Box 2b contains the portion of box 2a that is the Unrecaptured Section 1250 Gain from certain depreciable real property. This is reported on the Unrecaptured Section 1250 Gain Worksheet.
Box 2c contains the portion of box 2a that is Section 1202 gain from certain small business stock. These amounts may be subject to an exclusion from income Total Capital Gain Distributions from a regulated investment (such as a publicly traded company) or a real estate investment trust (REIT).
Box 2d contains the 28% gain from sales or exchanges of collectibles. This amount may need to flow to the 28% Rate Gain Worksheet in the Schedule D instructions.
Box 2e contains any dividend included in Box 1a that is attributable to a Section 897 Regulated Investment Company (RIC) or a Real Estate Investment Trust (REIT) owned by a non-US individual or foreign corporation.
Box 2f contains any capital gain (Section 897 RIC or REIT) included in Box 2a that is owned by a non-US individual or foreign corporation for which the disposition or partial disposition of a US Real Property Interest (USRPI) is owned by a non-US individual or foreign corporation.
Note: Both Box 2e and Box 2f were added in 2021 and apply only to foreign persons or entities for which the character of the income does not change when passed through to its foreign owners or beneficiaries. Such income is generally considered effectively connected income. These boxes should not be completed for a US citizen, but if they are they can be ignored. A foreign person may have had taxes withheld on this income reported on Form 1042-S.
Box 3 contains the Non-Dividend Distributions which represents any distribution to the investor/taxpayer from the underlying entity that is not made from the earnings of the entity but is a return of the cost or basis in the investment. Generally such a return of the cost/basis of an investment is not taxable and will reduce the basis in the investment. However, if the non-dividend distribution exceeds the cost basis of the investment, the excess would be treated as capital gain transaction. See Publication 550 - Investment Income and Expenses for additional instructions.
Box 4 contains the Federal Tax Withholdings including any backup withholdings that were withheld out of the dividend paid on the investment. Backup withholding is required when the taxpayer does not provide a TIN to the payer.
Box 5 contains the portion of the amount in Box 1a that may be eligible for the 20% qualified business income deduction under Section 199A. If the Box 1a dividend is a qualified REIT dividend, the taxpayer must have owned interest in the REIT for more than 45 days before receiving the dividend to be eligible to be included in the QBID.
Box 6 contains the portion of the amount in Box 1a representing the taxpayer's share of Investment Expenses of a non-publicly offered RIC, generally a non-publicly offered mutual fund.
Box 7 contains the foreign tax that the taxpayer may be able to claim as a deduction or a credit on Form 1040. See the 1040 instructions for more information.
Box 8 contains the country code related to the amount shown in Box 7. This box will or should be blank if the payer is a regulated investment company (RIC).
Box 9 contains the Cash Liquidation Distributions which represents the cash the investor/taxpayer received upon liquidation of all or part of the underlying entity. Generally the cash distribution is considered a return of the cost or basis in the investment. If the total distributions exceeds the cost basis of the investment, the excess would be treated as capital gain transaction. See Publication 550 - Investment Income and Expenses for additional reporting instructions.
Box 10 contains the Non-Cash Liquidation Distributions which represents the assets other than cash that the investor/taxpayer received upon liquidation of all or part of the underlying entity. Generally the distribution of these assets to an investor is considered a return of the cost or basis in the investment. Such distributions will reduce the basis in the investment, and if the total distribution exceeds the cost basis in the investment, the excess would be treated as capital gain transaction. See Publication 550 - Investment Income and Expenses for additional reporting instructions.
Box 11 contains the tax-exempt dividends paid. This amount is entered on Form 1040, Line 2a.
Box 12 contains the Specified Private Activity Bond Dividends. This amount is included in the Box 11 amount but will be subject to the Alternative Minimum Tax and be entered on Form 6251. See: Instructions for Form 6251.
Box 13 - 15 contains the State Withholding Information related to the bond or other debt investment.
Nominee Dividend - If the taxpayer received a 1099-DIV on behalf of someone else, they are a nominee. They will need to issue 1099-DIV(s) to the recipient(s), along with copies filed with the IRS summarized on Form 1096. Enter the amount of the dividend indicated paid to others in the Nominee Dividend box.
To input the Form 1099-DIV, from the Federal Section of the tax return (Form 1040) select:
- Income
- Schedule B - Forms 1099 INT, DIV, OID
- Interest or Dividend Income
- Dividend Income, Form 1099-DIV - Select it, then click Continue.
- Enter the payer's name (EIN and address info is optional), indicate whether the form is for the taxpayer or spouse, and enter the amount(s) into each box as needed.
Note: This is a guide to entering Form 1099-DIV into the TaxSlayer ProWeb program. This is not intended as tax advice.
Additional Information:
IRS: Instructions for 1099-DIV
