Form 1099-DIV: Dividends and Distributions (2020) — A Taxpayer's Guide

Understanding your tax forms doesn't have to be complicated. Form 1099-DIV is a document you'll receive if you earned money from investments like stocks or mutual funds. This guide breaks down everything you need to know about the 2020 version of this important tax form.

What Form 1099-DIV Is For

Form 1099-DIV is an information return used by banks, brokerage firms, mutual funds, and other financial institutions to report dividend income and other distributions they paid to investors during the tax year. Think of it as a receipt showing how much investment income you earned from a particular financial institution. IRS.gov

The form reports several types of investment income, including ordinary dividends (the regular payments companies make to shareholders), qualified dividends (which receive preferential tax treatment), capital gain distributions (profits from funds selling securities), and even foreign taxes paid on your behalf. You'll receive a Form 1099-DIV from each financial institution that paid you $10 or more in dividends during the year, or any amount if they withheld foreign or federal income tax from your account. IRS.gov

As a taxpayer who receives this form, you don't file it with the IRS—instead, you use the information it contains to accurately complete your personal income tax return (Form 1040). The payer sends copies to both you and the IRS, which means the agency already has a record of your dividend income and will match it against what you report on your return.

When You’d Use Form 1099-DIV (Late/Amended Filing)

Financial institutions must provide Form 1099-DIV to recipients by February 1, 2021 (for the 2020 tax year), although many taxpayers receive them in late January. If you haven't received your form by mid-February and believe you should have, contact the financial institution directly. IRS.gov

Late Filing Situations: Sometimes you'll receive a Form 1099-DIV after you've already filed your tax return. This can happen if the financial institution discovered unreported income or made corrections. If this occurs and the amounts are significant, you may need to file Form 1040-X (Amended U.S. Individual Income Tax Return) to correct your original filing. Generally, you have three years from the original filing deadline to amend your return and claim any additional refund.

Corrected Forms: If you receive a "CORRECTED" Form 1099-DIV (indicated by a checkbox marked at the top), carefully compare it to the original. Corrections might involve changes to dividend amounts, qualified dividend classifications, or capital gain distributions. Contact the payer if you have questions about what changed. If you've already filed your return using incorrect information, you'll need to determine whether the correction materially affects your tax liability—if so, file an amended return. IRS.gov

The IRS encourages prompt correction. While there's no absolute deadline for issuing corrected forms, the three-year statute of limitations for tax refunds means corrections should ideally be addressed within that window.

Key Rules or Details for 2020

Several important rules governed Form 1099-DIV reporting for the 2020 tax year:

Minimum Reporting Thresholds: Financial institutions must issue Form 1099-DIV if total dividends and distributions reached $10 or more during the year. However, even if you received less than $10 and didn't get a form, you're still legally required to report all dividend income on your tax return. IRS.gov

Schedule B Requirement: If your total ordinary dividends exceeded $1,500 for the year (from all sources combined), or if you received dividends in your name that belong to someone else, you must file Schedule B (Form 1040) along with your tax return to provide detailed information about each payer. IRS.gov

Qualified Dividends: One of the most important distinctions on Form 1099-DIV is between ordinary and qualified dividends. Qualified dividends are taxed at lower capital gains rates (0%, 15%, or 20% depending on your income bracket) rather than your ordinary income tax rate. To qualify, dividends must come from domestic corporations or qualified foreign corporations, and you must have held the stock for more than 60 days during the 121-day period surrounding the ex-dividend date. The form issuer determines this classification for you. IRS.gov

Reinvested Dividends: Many investors automatically reinvest dividends to purchase additional shares. This is still taxable income in the year received, even though you didn't receive cash. Make sure to report reinvested dividends shown on your 1099-DIV.

Section 199A Dividends: For 2020, Box 5 reports Section 199A dividends, which include qualified REIT (Real Estate Investment Trust) dividends and certain dividends from regulated investment companies (mutual funds). These may qualify for an additional tax deduction under the Qualified Business Income deduction provisions.

Step-by-Step (High Level)

Step 1: Gather All Forms

Wait until you've received all expected Forms 1099-DIV before filing your return. Most arrive by late January, but mutual funds and REITs may send theirs later. Keep your brokerage statements to verify you've received a form from each institution.

Step 2: Review for Accuracy

Carefully examine each form for errors. Check that your name, Social Security Number, and address are correct. Verify the amounts against your own records. If you spot an error, contact the payer immediately to request a corrected form.

Step 3: Determine Your Reporting Method

If your total ordinary dividends are $1,500 or less, you can report them directly on Form 1040, Line 3b (ordinary dividends) and Line 3a (qualified dividends). If they exceed $1,500, you must complete Schedule B and attach it to your Form 1040.

Step 4: Report Ordinary Dividends

Add up Box 1a (Total Ordinary Dividends) from all your Forms 1099-DIV. Report this total on your Form 1040 or Schedule B. This includes all dividend income, regardless of whether it's qualified.

Step 5: Report Qualified Dividends

Sum Box 1b (Qualified Dividends) from all forms. Report this on Form 1040, Line 3a. These dividends receive preferential tax treatment and are included in the Box 1a total but taxed at lower rates.

Step 6: Report Capital Gain Distributions

If Box 2a contains capital gain distributions, report these on Schedule D (Capital Gains and Losses) or the Schedule D Tax Worksheet. These are typically long-term capital gains taxed at preferential rates.

Step 7: Handle Other Boxes

Report foreign taxes paid (Box 7) on Form 1116 or take a deduction on Schedule A. Report tax-exempt interest dividends (Box 11) on Form 1040, Line 2a. Each box serves a specific purpose in your tax calculation.

Step 8: Keep Your Documentation

Retain all Forms 1099-DIV with your tax records for at least three years (or longer if you amended your return). The IRS may request documentation if they have questions about your return.

Common Mistakes and How to Avoid Them

Mistake 1: Forgetting to Report Small Amounts

Many taxpayers assume that if they didn't receive a 1099-DIV (because amounts were under $10), they don't need to report the income. Wrong! All dividend income is taxable and must be reported, regardless of amount. Avoidance: Review all account statements, even for accounts that didn't generate a form.

Mistake 2: Overlooking Reinvested Dividends

Some investors forget that automatically reinvested dividends are taxable in the year earned. The fact that you didn't receive cash doesn't matter. Avoidance: Check Box 1a carefully—it includes reinvested amounts. Also, properly track your cost basis, as reinvested dividends increase your basis in the investment.

Mistake 3: Entering Information Twice

This commonly happens with consolidated brokerage statements. If your broker provides a composite 1099 showing multiple types of income, don't separately enter a 1099-DIV if that dividend information is already included in the composite form. Avoidance: Carefully review consolidated statements and enter information only once.

Mistake 4: Misreporting TIN/SSN

Transposed digits in your Taxpayer Identification Number can trigger IRS notices and potential backup withholding. Avoidance: Verify that your SSN on the form matches your Social Security card exactly. Contact the payer immediately if it's incorrect.

Mistake 5: Ignoring Foreign Tax Paid

Box 7 shows foreign taxes withheld on your dividends. Many taxpayers overlook this, missing out on either a tax credit or deduction. Avoidance: If Box 7 has an amount, consult IRS Form 1116 instructions or a tax professional to claim your foreign tax credit.

Mistake 6: Not Distinguishing Ordinary vs. Qualified Dividends

Reporting all Box 1a dividends as ordinary income (rather than separating out the qualified dividends in Box 1b) can cost you significant tax savings. Qualified dividends are taxed at lower rates. Avoidance: Always report both Box 1a and Box 1b separately on your Form 1040.

Mistake 7: Failing to File Schedule B When Required

The $1,500 threshold for Schedule B is aggregate across all interest and dividend sources. Avoidance: Add up all your dividend and interest income. If the total exceeds $1,500, complete Schedule B even if individual amounts are small.

What Happens After You File

IRS Matching Program

The IRS uses automated systems to match the Forms 1099-DIV filed by payers against what taxpayers report on their returns. If there's a discrepancy—you reported less than what financial institutions reported to the IRS—you'll likely receive a CP2000 Notice (Proposed Changes to Your Tax Return). This isn't technically an audit, but it requires a response. You'll need to either agree to the proposed changes and pay additional tax, or explain why the IRS information is incorrect.

Processing Timeline

For electronically filed returns, expect your refund (if any) within 21 days if there are no issues. Paper returns take 6-8 weeks. The IRS processes millions of returns, and 1099 mismatches are one of the most common reasons for processing delays.

Corrected Forms After Filing

If you receive a corrected 1099-DIV after filing, compare it to what you originally reported. If the correction is minor (a few dollars) and doesn't change your tax owed or refund by a significant amount, the IRS may accept your return as filed. For material changes, file Form 1040-X to amend your return. The IRS generally recommends amending if the tax change exceeds $100.

State Tax Returns

Don't forget that most states require dividend income reporting as well. Boxes 13-15 on Form 1099-DIV are designated for state tax information. If your state has income tax, ensure you report the same dividend amounts on your state return.

Record Retention

Keep your Forms 1099-DIV for at least three years from the filing deadline. If you've claimed basis adjustments or carried forward capital losses, retain records for longer. Good recordkeeping becomes especially important if you receive corrected forms or face IRS questions.

FAQs

Q1: What if I didn't receive my Form 1099-DIV but think I should have?

Contact the financial institution directly—they're required to provide it by February 1 if you earned $10 or more. Many firms now offer forms electronically through secure portals, so check online before assuming it wasn't sent. If you can't obtain the form by the April filing deadline, you can still file your return using your best estimate based on account statements. Report the income even without the form—failure to report known income can result in penalties. IRS.gov

Q2: Do I need to attach Form 1099-DIV to my tax return?

No, you do not attach Forms 1099-DIV when filing. You keep them with your tax records for documentation. The information is already sent to the IRS by the payer, and you're reporting the amounts on the appropriate lines of your Form 1040 or Schedule B. Attaching forms unnecessarily can slow processing.

Q3: What's the difference between ordinary and qualified dividends, and why does it matter?

Ordinary dividends (Box 1a) are taxed at your regular income tax rate, which could be as high as 37% for 2020. Qualified dividends (Box 1b, a subset of Box 1a) are taxed at preferential capital gains rates—0%, 15%, or 20% depending on your income level. This distinction can save substantial tax money. The payer determines qualification based on holding period requirements and the type of corporation paying the dividend. IRS.gov

Q4: I sold my stock during 2020. Do I still report the 1099-DIV even though I don't own the stock anymore?

Absolutely. Form 1099-DIV reports dividends you received during the year, regardless of whether you still own the stock. You'll also receive a Form 1099-B for the stock sale. Both forms are important—the 1099-DIV reports dividend income, while the 1099-B reports capital gains or losses from the sale.

Q5: What if my Form 1099-DIV has an amount in Box 4 (Federal Income Tax Withheld)?

Box 4 shows backup withholding, which occurs if you failed to provide a valid Taxpayer Identification Number or the IRS notified the payer to withhold due to underreporting. Treat this like any other withholding—report it on Form 1040, Line 25d, where you enter federal income tax withheld. This amount credits toward your total tax liability.

Q6: I received a 1099-DIV for an account that belongs to someone else or should be split. What do I do?

If your name is on a 1099-DIV but some or all of the income belongs to another person (perhaps a joint account where you're listed first), you must report the total and then show a "nominee distribution" to indicate you're passing through income to the true owner. This requires filing Schedule B and preparing separate Forms 1099-DIV for the other owner(s) showing their share. This ensures you're not taxed on income that isn't yours while properly reporting to the IRS. IRS.gov

Q7: Can I deduct investment expenses shown in Box 6?

For 2020, investment expenses (Box 6) are included in your gross income (Box 1a) but are subject to complex rules. Under the Tax Cuts and Jobs Act, miscellaneous itemized deductions subject to the 2% floor—which historically included investment expenses—were suspended for tax years 2018-2025. This means for most individual taxpayers, these expenses aren't deductible on Form 1040. However, they may still be relevant for certain trusts and estates. Consult IRS instructions or a tax professional if Box 6 contains significant amounts.

For More Information

Visit IRS.gov/Form1099DIV for the latest forms, instructions, and updates. The IRS also provides free tax preparation help through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs for qualifying taxpayers.

This guide provides general information about Form 1099-DIV for the 2020 tax year based on official IRS publications. Tax situations vary, and complex scenarios may require professional tax advice.

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