How to Read Your Form 1099-DIV. Many investors who receive dividend income are confused by the way this income is broken down on the 1099-DIV form. This article explains how to interpret the numbers in each of the commonly used boxes on this form.
Look at box 1a of your 1099-DIV. This box is labeled "ordinary dividends." This means that the income reported in this box is taxed as ordinary income. Ordinary income is always taxed at your top marginal tax rate. This income is reported either directly on the form 1040 or on Schedule B.
Box 1b of your form is labeled "qualified dividends." These are dividends that qualify for the lower 15 percent or zero capital gains tax rate. They are reported separately on the 1040.
Box 2a shows total capital gains distributions from a mutual fund or real estate investment trust (REIT). This income will be reported either on Schedule D or directly on your 1040.
Boxes 2b and 2c are used to report capital gains or income recapture from various types of real estate transactions. This type of income is much less common than the type of income realized in the previous boxes.
Box 2d will contain the amount of capital gain received from the sale of a collectible or antique item. This type of income never qualifies for capital gains treatment, regardless of your holding period or tax bracket.
Box 6 shows any foreign tax that has been paid to other countries. This is usually the result of investing in an international or global mutual fund, but can be from any type of foreign investment.
For more information on dividend income, visit the IRS website at irs.gov (see link below) and type "dividends" or "1099-DIV" into the search bar.
This article is intended to provide a rudimentary introduction on the Form 1099-DIV. It is not intended as specific financial or tax advice, but rather alert you as to whether claiming this credit might be possible. For further clarification on this matter, you should consult your tax advisor.
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