What Form 1099-DIV (2019) Is For
IRS Form 1099-DIV (2019) is used to report dividend income and other dividends and distributions paid by financial institutions, mutual funds, real estate investment trusts, domestic corporations, and certain qualified foreign corporations during the 2019 tax year. A taxpayer receives this tax form when total dividends paid meet reporting thresholds, including ordinary dividends, qualified dividends, capital gain distributions, exempt interest dividends, and related payments. Because the Internal Revenue Service also receives a copy, dividends reported must match the amounts shown on the tax return.
The form applies to dividends received from regulated investment companies, credit unions, mutual savings banks, and foreign corporations that meet rules under the Internal Revenue Code. These taxable dividends can include dividend payments, interest dividends, long-term capital gains distributions, and special tax treatment categories such as qualified dividend income. Even when dividends distributed fall below $10, they remain taxable income and must be reported when taxpayers declare dividends and file their federal income tax returns.
When You’d Use Form 1099-DIV
A taxpayer uses Form 1099-DIV when reporting taxable income from dividends received during the tax year. This includes dividends paid by domestic corporations, mutual fund companies, and foreign companies operating in an established securities market or covered under a comprehensive income tax treaty. The form also applies when a financial institution reports total ordinary dividends, foreign tax withheld, or capital gains distributions.
Form 1099-DIV is used in situations involving late or amended filings, such as when a corrected 1099-DIV is received after a return has already been submitted. A taxpayer may need to update federal income tax calculations when the corrected form changes total dividends, qualified dividends taxed at the qualified dividend tax rate, or foreign tax amounts. Amended filings may also be required when dividend income was overlooked, reinvested dividend payments were missed, or capital gain amounts changed based on adjustments from a mutual fund or regulated investment company.
Key Rules or Details for 2019
For 2019, Form 1099-DIV includes several key rules that affect how taxpayers classify and report dividend income. Ordinary dividends are typically taxed at the ordinary income tax rate. In contrast, qualified dividends may receive a lower tax rate if they meet holding period rules involving the 121 days around the stock’s ex-dividend date. Qualified dividends typically originate from domestic corporations or qualified foreign corporations, whereas dividends from a passive foreign investment company or a surrogate foreign corporation generally do not qualify as such.
Capital gain distributions and capital gains distributions from mutual funds and real estate investment trusts must be reported even when no shares were sold. Foreign tax withheld on dividends paid by foreign corporations may qualify for the foreign tax credit. Special timing rules apply when a fund’s ex-dividend date occurs in 2019 but the dividend payment is made in January, requiring the taxpayer to treat the dividend as 2019 income. These rules affect income tax calculations, fair market value adjustments, accumulated earnings, and net investment income tax considerations for married taxpayers filing jointly or separately.
For complete details on reporting, withholdings, and tax filings, see our guide for Information Returns & Reporting Forms.
Step-by-Step (High Level)
Step 1: Gather All Forms
A taxpayer should collect every Form 1099-DIV issued by each financial institution, credit union, brokerage, or mutual fund that paid dividends. Reinvested dividends must also be included, as they are considered taxable income.
Step 2: Report Ordinary Dividends
A taxpayer reports total ordinary dividends from Box 1a on Form 1040. If total ordinary dividends exceed the IRS threshold, the return must include Schedule B.
Step 3: Report Qualified Dividends
A taxpayer reports qualified dividends listed in Box 1b on the line for qualified dividends. These dividends receive favorable tax treatment if the shares are held for a sufficient period around the security’s ex-dividend date.
Step 4: Report Capital Gain Distributions
A taxpayer includes capital gain distributions from Box 2a on Schedule D or directly on Form 1040, depending on filing requirements. These amounts may affect long-term capital gains tax calculations.
Step 5: Report Foreign Tax
A taxpayer may claim the foreign tax credit by using Form 1116 if foreign tax was withheld on dividends received from foreign corporations.
Step 6: Report Backup Withholding
Any federal income tax withheld under backup withholding rules should be listed as tax paid. Backup withholding may occur when taxpayer information is incomplete or inaccurate.
Common Mistakes and How to Avoid Them
- Forgetting to report small dividends under $10: Report all dividends as taxable income, even without a Form 1099-DIV, by reviewing year-end account statements.
- Mixing up ordinary and qualified dividends: Report Box 1a as ordinary dividends and Box 1b as qualified dividends (part of Box 1a) to ensure the correct tax rate applies.
- Missing capital gain distributions: Include capital gain distributions reported by mutual funds, even if you did not sell shares to avoid underreporting income.
- Misreporting nondividend distributions: Treat nondividend distributions as a reduction of cost basis and track them to calculate accurate gain or loss when the investment is sold.
- Overlooking the foreign tax credit: Review Box 7 for foreign taxes paid and claim the foreign tax credit or deduction when eligible to reduce total tax liability.
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 a taxpayer files a return, the Internal Revenue Service matches total dividends, qualified and ordinary dividends, capital gain amounts, and foreign tax information with records received from financial institutions. If the dividends received and the dividends reported match, the return proceeds without issue. If differences appear, the IRS may contact the taxpayer regarding taxable income, dividends taxed, or potential adjustments.
The IRS may issue a notice when ordinary dividends reported amounts, qualified dividend income, or capital gain distributions do not align with the amounts shown on Form 1099-DIV. A taxpayer may need to submit updated tax forms or provide documentation to support tax advice to correct discrepancies. Accurate reporting is crucial because errors can impact future tax years, cost basis calculations, fair market value adjustments, and the tax implications of future dividend payments, including the next dividend payment on preferred stock or readily tradable shares.
FAQs
Why did I receive Form 1099-DIV?
A taxpayer receives this form when dividends paid by financial institutions, mutual funds, or corporations meet reporting rules for the tax year.
Are reinvested dividends taxable?
Reinvested dividends are taxable even if the cash was used automatically to purchase additional shares.
What should I do if I receive a corrected form?
A taxpayer should compare the corrected form with the original. If taxable income or capital gains change, an amended return may be required.
Do foreign dividends qualify for a lower tax rate?
Foreign dividends may receive favorable treatment if they originate from certain qualified foreign corporations or countries with established securities markets.
What if I did not receive the form?
A taxpayer should contact the financial institution or access online account records to retrieve the information.
