Any time you receive a taxable cash dividend, the Internal Revenue Service (IRS) expects you to report it. It must be declared on your income taxes for the year in which it was received. Which form you place it on depends on the amount of the dividend. The amount will be reported to you on a form 1099 DIV. This form will also let you know if the dividend is taxable or not. As a general rule, all ordinary dividends are taxable and must be reported.
1. Look at the 1099 DIV you received regarding the dividend. Find the tax information on the form and see if the dividend is listed as taxable or non-taxable. If it is non-taxable, you don't need to report it and you can stop here. If it is taxable, go on to the next step.
2. Check the amount of your ordinary dividends. If the total amount is over $1,500.00, as of the time of publication, you must fill out Schedule B with complete information regarding the source and amount, or amounts, of your dividends. You also need to fill out section 3 of Schedule B. The amount must be entered on line 9a of your 1040 form. Schedule B must be submitted along with your form 1040.
3. Enter the total on line 9a of your form 1040 if the total amount of your cash dividends does not exceed $1,500. In this case you don't need to attach Schedule B to your form 1040.
4. Write the amount of your qualified dividends on line 9b of your 1040 form. The 1099-DIV that you received shows this as a separate amount from the total. The difference between the amount you entered on line 9a and the amount on line 9b represents your total amount of non-qualified dividends. Qualified dividends are taxed at a lower rate than non-qualified dividends so it is important to include them.
- Qualified and non-qualified dividends are added together on the 1099-DIV and are reported as a single amount. The amount in the qualified dividends box has already been included in the total.
- If you are required to submit Schedule B, be sure to fill out all applicable sections of the form, including section 3. Failure to completely fill out the form could will most likely cause a delay in the processing of your taxes. You may be charged penalties and interest if there is a delay in your taxes due to an error on your part.
Items you will need
- IRS tax forms 1040 and Schedule B
- Carol Cowling; Certified Public Accountant; Waterville, WA
- IRS.gov: Form 1040 Instructions
- IRS.gov: Schedule B: Instructions
- Fairmark; Nondividend Distributions; Reporting Nondividend Distributions; Kaye A. Thomas; February 2008
- Photodisc/Photodisc/Getty Images