What Form 1099-DIV (2013) Is For
IRS Form 1099-DIV (2013) is used by financial institutions, mutual funds, and other financial organizations to report dividend income and capital gain distributions to the Internal Revenue Service. It helps taxpayers record ordinary dividends, qualified dividends, and exempt interest dividends received during the 2013 tax year. This form ensures that all dividends paid and investment income are accurately included in the taxpayer’s federal income tax return.
Investors receive Form 1099-DIV when they earn $10 or more in dividends or $600 or more in cash liquidation distributions or noncash liquidation distributions. A regulated investment company, domestic corporation, or qualified foreign corporation that paid dividends directly to shareholders must file Form 1099-DIV with the IRS. The information reported determines taxable income and supports proper reporting of dividends and distributions on tax returns.
When You’d Use Form 1099-DIV
Form 1099-DIV is used when preparing a federal income tax return that includes dividends paid from mutual funds, preferred stock, or other investments. Financial institutions must send the form by January 31, 2014, to report all 2013 dividend payments, capital gains distributions, and other distributions. Taxpayers should include total ordinary dividends, qualified REIT dividends paid, and total capital gain distributions in the correct sections of the tax return.
If an investor does not receive the form or identifies errors in the reported amounts, they should contact the financial institution immediately. A corrected form marked “CORRECTED” may be issued, and if necessary, the taxpayer can file Form 1040X to amend the return. Any federal income tax withheld or state income tax withheld must also be entered accurately to avoid IRS or state tax department discrepancies.
For complete details on reporting, withholdings, and tax filings, see our guide for Information Returns & Reporting Forms.
Key Rules or Details for 2013
For the 2013 tax year, Form 1099-DIV reporting followed specific Internal Revenue Code requirements. Qualified dividends from domestic corporations and qualified foreign corporations could be taxed at reduced capital gains rates rather than as ordinary income. Financial institutions were required to issue the form if dividend income exceeded $10, and to report foreign tax withheld, backup withholding, or FATCA filing requirements when applicable.
Investors should report only the amount shown for total ordinary dividends, capital gain distributions, and qualified REIT dividends paid. The form may also include foreign tax, fair market value of noncash distributions, or federal income tax withheld. Backup withholding rules applied when a taxpayer identification number or social security number was missing or incorrect, and taxpayers with more than one form had to combine all amounts reported for accuracy.
Step-by-Step (High Level)
Taxpayers should follow these general steps when handling Form 1099-DIV information.
Step 1: Receive and Review
- Wait until early February to ensure all Forms 1099-DIV have arrived.
- Verify that the name, social security number, and amounts reported are correct.
- Confirm that the fair market value of any noncash distributions is accurately shown.
Step 2: Organize Forms
- Combine data from all forms if dividends were paid from multiple accounts.
- Track reinvested dividends and noncash liquidation distributions, which affect the cost basis of investments.
Step 3: Report on the Tax Return
- Enter total ordinary dividends (Box 1a) and qualified dividends (Box 1b) on Form 1040.
- Report capital gain distributions (Box 2a) on Schedule D or the appropriate line of the tax return.
- Include federal income tax withheld (Box 4) and state income tax withheld (Box 14) as part of the total tax paid.
- Report foreign tax withheld (Box 6) and claim the credit if applicable.
Step 4: Attach Required Schedules
- Complete Schedule B if total ordinary dividends exceed $1,500.
- File Form 1116 if claiming the foreign tax credit.
Step 5: Keep Records
- Retain all Forms 1099-DIV and related statements for at least three years.
- Maintain records of investment expenses, reinvested dividends, and qualified REIT dividends paid to ensure proper cost basis tracking.
Common Mistakes and How to Avoid Them
- Ignoring small dividend amounts under $10: Report all dividends as taxable income, even if no Form 1099-DIV is issued, to avoid IRS matching notices.
- Adding total and qualified dividends together: Report Box 1a as total ordinary dividends and treat Box 1b as included in Box 1a to prevent overstating income.
- Forgetting reinvested or noncash dividends: Include reinvested dividends in income for the year received and track them since they increase your cost basis.
- Overlooking corrected Form 1099-DIV statements: Use the corrected form for final reporting and file Form 1040-X if the changes affect your return.
- Omitting dividend-related withholding: Report any federal or state tax withheld so you receive proper credit and avoid misapplied payments.
Reviewing all forms, verifying dividend classifications, and maintaining accurate investment records help ensure accurate reporting and reduce the risk of IRS discrepancies.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
After filing a tax return with Form 1099-DIV, the Internal Revenue Service matches the amounts reported against data from financial institutions to verify dividend income, qualified dividends, and capital gain distributions. If discrepancies are found, the IRS may issue additional notices, such as a CP2000, to correct federal income tax reporting. State tax departments also verify the accuracy of reported investment income, foreign tax, and backup withholding. Taxpayers should keep records of fair market value, ex-dividend dates, and dividends paid for future audits or amended tax returns.
FAQs
What is IRS Form 1099-DIV (2013) used for?
IRS Form 1099-DIV (2013) reports dividend income, ordinary dividends, and capital gain distributions paid by financial institutions or mutual funds. It helps the Internal Revenue Service determine taxable income and ensures dividends paid are accurately included on your federal income tax return.
How do I report qualified dividends and capital gain distributions on my tax return?
Qualified dividends and capital gain distributions should be entered on Form 1040 using the Qualified Dividends and Capital Gain Tax Worksheet. Only the amount shown on Form 1099-DIV should be reported to calculate reduced capital gains rates for this tax year.
What should I do if my Form 1099-DIV indicates that foreign tax was withheld on my investment income?
If your Form 1099-DIV includes foreign tax, you may claim it as a deduction or a credit on your tax return. File Form 1116 if you paid foreign tax to a foreign corporation or a qualified foreign corporation during the tax year.
Are dividends from money market funds and mutual funds taxable?
Yes, dividends paid from mutual funds or money market funds are considered taxable investment income. Report all dividends paid directly by these institutions, including exempt interest dividends, on your federal income tax return according to Internal Revenue Code reporting rules.
What if I have more than one Form 1099-DIV from different financial institutions?
When investors receive multiple Forms 1099-DIV, they must combine all amounts reported for total ordinary dividends, qualified dividends, and capital gains. File Form 1099-DIV accurately to report dividends and distributions from each financial institution on your tax return.
