What Form 1099-DIV (2023) is for
Form 1099-DIV reports dividend income and distributions paid to taxpayers during the tax year. Financial institutions, mutual funds, and other investment vehicles issue it to investors who receive dividend or capital gain distributions. The form helps taxpayers report dividends paid, foreign tax withheld, and federal income tax obligations. You use it to complete your tax return and calculate taxable income for both federal and state taxes.
When you’d use Form 1099-DIV (2023)
Taxpayers receive Form 1099-DIV during tax season if they earned at least $10 in dividends from domestic corporations, foreign corporations, or regulated investment companies. It also reports exempt interest dividends, qualified REIT dividends paid, and any withheld federal income tax under backup withholding rules. If the form has errors or missing information from multiple accounts, request a corrected version. If changes affect reported income, file an amended return using IRS Form 1040-X.
Key rules or details for the 2023 tax year
- $10 reporting threshold: Financial institutions must issue Form 1099-DIV for dividend income of $10 or more. Even if you earned less, you must still report dividends on your tax return.
- $1,500 Schedule B requirement: When total ordinary dividends and interest income exceed $1,500, attach Schedule B to your tax forms, including amounts from money market funds and other distributions.
- Qualified vs. Ordinary Dividends: Ordinary dividends are taxed as ordinary income, whereas qualified dividends are taxed at reduced capital gains rates. The payer must be a qualified foreign corporation or domestic corporation.
- Capital gain distributions: Capital gain distributions from mutual funds or REITs are reported as total capital gain distributions and may receive favorable long-term tax rates.
- Exempt interest dividends: Exempt interest dividends from specified private activity bonds are exempt from federal income tax but may be subject to state income tax or the alternative minimum tax.
- Foreign tax reporting: If foreign tax was withheld in a foreign country, report it separately. You may claim a foreign tax credit or deduction under the Internal Revenue Code.
- Electronic filing: Financial institutions that file 10 or more information returns, including Form 1099-DIV, must submit these returns electronically to the IRS.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-step (high level)
Step 1: Gather all your Forms 1099-DIV
Collect every Form 1099-DIV from your financial institutions or taxable brokerage accounts. You may receive more than one form if you own multiple accounts or mutual funds under different taxpayer identification numbers.
Step 2: Review important boxes on the form
Check Box 1a for total ordinary dividends, Box 1b for qualified dividends, and Box 2a for total capital gain distributions. Box 4 shows withheld federal income tax, while Box 6 lists foreign tax paid to a foreign country. Boxes 8–11 cover exempt interest dividends from private activity bonds.
Step 3: Verify any backup withholding or REIT details
If backup withholding rules applied, verify that the withheld federal income tax appears in Box 4. Box 5 lists qualified REIT dividends paid, which may be eligible for a 20% deduction under Section 199A of the Internal Revenue Code.
Step 4: Report dividends and distributions on your tax return
Report total ordinary dividends and qualified dividends on Form 1040, Lines 3a and 3b. Capital gain distributions or amounts from certain depreciable real property may appear on Schedule D. Verify that any fair market value from qualified small business stock or preferred stock is accurately reported.
Step 5: Keep all records for the tax year
Retain all Forms 1099-DIV for at least three years. Accurate documentation confirms your recipient’s gross income, fair market basis, and ensures you can verify reporting income if questioned by the IRS.
Learn more about federal tax filing through our IRS Form Help Center.
Common mistakes and how to avoid them
- Failing to report all dividend income: Report all dividend income, even if it’s under $10 or you didn’t receive a form. Track all dividends paid throughout the tax year to avoid underreporting.
- Mixing up ordinary and qualified dividends: Ordinary dividends appear in Box 1a, while qualified dividends appear in Box 1b. Using tax software or a tax professional ensures that the correct rates are applied.
- Missing Schedule B: If your total interest income and ordinary dividend reported exceed $1,500, file Schedule B to avoid IRS notices.
- Ignoring foreign tax or foreign corporation details: Always report foreign tax paid or income from a foreign corporation. Identify each foreign country and claim credits if eligible.
- Overlooking corrected forms or cash liquidation distributions: Wait until mid-February to file so all corrected forms and cash liquidation distributions arrive, reducing the need for amended returns.
- Not claiming withheld federal income tax: Claim all withheld federal taxes from Box 4 to avoid overpaying—Double-check entries before filing your tax return.
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 you file, the IRS compares your dividend income against information that financial institutions submitted electronically. If amounts differ, you might receive a CP2000 notice for unreported income. Respond promptly or consult a tax professional for tax advice. If corrections are needed, file an amended return using IRS Form 1040-X. Refunds for overpaid federal or state taxes typically arrive within a few weeks when filed electronically.
FAQs
Do I need to file a tax return if my only income is dividend income from Form 1099-DIV?
You must file a tax return if your total dividend income and other earnings exceed the standard deduction for your filing status. Even if your only income comes from dividends, filing ensures you recover any withheld federal income tax and meet IRS requirements.
How does Form 1099-DIV affect my federal income tax and taxable income?
Form 1099-DIV details your ordinary and qualified dividends, which add to your taxable income. Ordinary dividends are taxed at regular rates, while qualified dividends may qualify for reduced capital gains rates. Report both on your federal income tax return to avoid discrepancies.
What are exempt interest dividends, and do they affect my state income tax?
Exempt interest dividends are generally free from federal income tax but may be taxable under certain state income tax rules. Review your state’s requirements and report any amounts from specified private activity bonds if applicable.
How should I report foreign tax paid to a foreign country on Form 1099-DIV?
Report foreign tax paid as shown in Box 6 and identify the foreign country listed in Box 7. You can claim a foreign tax credit or deduction depending on eligibility, which may reduce your total federal taxes owed.
What should I do if I receive multiple Forms 1099-DIV showing capital gains distributions?
Combine totals from all Forms 1099-DIV, including total capital gain distributions and ordinary dividends. Report combined figures on your tax return to ensure accuracy. Keeping records from multiple accounts helps avoid underreporting.
How do I handle investment expenses and deductions shown on Form 1099-DIV?
Investment expenses listed on your Form 1099-DIV are generally not deductible under current law. However, some related costs may reduce your taxable income in certain cases. Consult a tax professional before claiming any deductions.
