What Form 1099-DIV (2011) Is For
IRS Form 1099-DIV (2011) is used by corporations, mutual funds, and other financial institutions to report dividend income and capital gain distributions paid to taxpayers during the 2011 tax year. The form helps the Internal Revenue Service track taxable income from dividends paid, ordinary dividends, qualified dividends, and exempt interest dividends. Financial institutions must issue Form 1099-DIV to recipients who receive at least $10 in dividends or have federal income tax withheld.
This form also reports foreign tax, state income tax withheld, and investment expenses related to dividend payments. It applies to dividends paid directly from domestic corporations, regulated investment companies, or qualified foreign corporations. Recipients must use the amounts reported, including total ordinary dividends and total capital gain distributions, when filing their tax return to ensure accurate reporting of dividend income and ordinary income.
When You’d Use Form 1099-DIV
Taxpayers use Form 1099-DIV when they receive dividends paid from stocks, mutual funds, or other financial institutions. The form includes information on capital gains distributions, cash liquidation distributions, and noncash liquidation distributions that may affect fair market value and taxable income. Dividends from money market funds, preferred stock, and qualified REIT dividends paid are also reported.
If more than one form is received from multiple accounts or payers, taxpayers must include all amounts reported on their tax returns. Those who have federal income tax withheld under backup withholding rules or state income tax withheld must claim those amounts as payments. Dividends reinvested or received from a foreign corporation, as well as other distributions, must be included in reporting distributions on the taxpayer’s return.
Key Rules or Details for 2011
For the 2011 tax year, IRS Form 1099-DIV (2011) required financial institutions, mutual funds, and other financial institutions to report dividend income, capital gain distributions, and federal income tax withheld to the Internal Revenue Service. Ordinary dividends, qualified dividends, and exempt interest dividends contributed to the taxpayer’s total taxable income, while qualified REIT dividends paid and total capital gain distributions were reported separately. Payers were required to include foreign tax, state income tax withheld, and the taxpayer's identification number under the backup withholding rules to ensure accurate reporting of distributions.
The Internal Revenue Code required regulated investment companies and domestic corporations to report dividends paid directly to recipients, including cash liquidation distributions, noncash liquidation distributions, and dividends from qualified foreign corporations. Dividends paid from money market funds or preferred stock were also included if they affected ordinary income or capital gains. Only the amount of dividends paid and related investment expenses entered on Schedule B were used to determine the recipient’s gross income and the fair market value of any distributions.
For complete details on reporting, withholdings, and tax filings, see our guide for Information Returns & Reporting Forms.
Step-by-Step (High Level)
For Recipients
- Receive Form 1099-DIV: Receive Form 1099-DIV from each financial institution by late January 2012 and confirm that all mutual funds or other financial institutions have sent the necessary forms.
- Verify Personal Information: Check that the taxpayer’s name, address, and Social Security number are correct. Contact the financial institution immediately if any information is inaccurate.
- Review Each Box: Review all boxes carefully. Box 1a shows total ordinary dividends, Box 1b shows qualified dividends, Box 2a reports capital gain distributions, Box 3 lists nondividend distributions, Box 4 shows withheld federal income tax, and Box 6 lists foreign tax paid.
- Report on the Tax Return: Enter total ordinary dividends on Form 1040, line 9a, and qualified dividends on line 9b. Report capital gains on Schedule D, claim federal income tax withheld as a payment, and consider foreign tax as a deduction or credit.
- Keep Records: Retain all Forms 1099-DIV, investment statements, and related documentation for at least three years for Internal Revenue Service verification.
For Payers
- Identify and Calculate Dividends: Identify all dividends paid, including ordinary dividends, qualified dividends, and capital gain distributions. Verify the taxpayer identification number before submitting the form.
- File and Furnish Forms: Furnish recipient copies by January 31, 2012. File paper copies with the Internal Revenue Service by February 28, 2012, and file electronically by April 2, 2012. Ensure that all reporting complies with federal income tax requirements.
Common Mistakes and How to Avoid Them
- Confusing dividends with interest income: Money market fund dividends appear on Form 1099-DIV, while bank interest is reported on Form 1099-INT. Always verify the source before reporting.
- Failing to verify qualified dividend eligibility: Not all dividends qualify for reduced tax rates. Ensure the holding period and issuer qualification requirements are met.
- Ignoring nominee distributions: If dividends belong to someone else, issue a new Form 1099-DIV to the correct recipient and file a Form 1096 with the IRS.
- Overlooking nondividend distributions: These reduce the stock’s cost basis and must be tracked to calculate accurate capital gains later.
- Forgetting to claim backup withholding or state income tax withheld: Always report withheld taxes as credits on your return to avoid overpayment.
Properly distinguishing income types, verifying eligibility, and maintaining organized records ensures accurate tax filings and minimizes IRS correspondence.
What Happens After You File
After the taxpayer files a tax return using Form 1099-DIV, the Internal Revenue Service compares the amounts reported by financial institutions, mutual funds, and other financial institutions to verify accuracy. Any differences in total ordinary dividends, capital gain distributions, or federal income tax withheld may result in a notice requiring correction. If dividends are paid, foreign tax is paid, or other distributions are made, the taxpayer must file Form 1040X to amend the tax return in compliance with the Internal Revenue Code.
FAQs
What is IRS Form 1099-DIV (2011) used for?
IRS Form 1099-DIV (2011) reports dividend income, ordinary dividends, and capital gain distributions paid by financial institutions and mutual funds. The form also includes foreign tax, federal income tax withheld, and state income tax withheld, which must be reported on the taxpayer’s return.
Do I need to report dividend income from mutual funds and other financial institutions?
Yes, all dividends paid, including those from mutual funds, money market funds, and other financial institutions, must be included as taxable income on your tax return. This ensures the Internal Revenue Service receives accurate amounts reported for ordinary income and capital gains.
What should I do if my Form 1099-DIV shows that federal income tax has been withheld?
If your Form 1099-DIV shows federal income tax withheld, include that amount as a payment when filing your tax return. The Internal Revenue Code requires reporting all withheld federal income tax and state income tax withheld to calculate total taxable income accurately.
Are dividends paid inside retirement accounts reported on Form 1099-DIV?
No, dividends paid into retirement accounts, such as IRAs or 401(k)s, are not currently taxable and do not appear on Form 1099-DIV. Only dividends paid directly from financial institutions, mutual funds, or domestic corporations should be reported as dividend income.
How should I handle multiple Forms 1099-DIV or corrected forms?
When receiving more than one Form 1099-DIV from multiple accounts, report all dividend payments, qualified dividends, and capital gain dividends on your tax return. If a corrected form arrives, file Form 1040X to amend your return and update all amounts reported to the Internal Revenue Service.
For more resources on filing or understanding prior-year IRS forms, visit our Form Summaries and Guides Library or see our IRS assistance guide.
