If you put money into a regular bank savings account, it will earn interest. Credit union savings accounts work in the same way, but they call these payments dividends rather than interest. The IRS requires you to report credit union dividends as interest earnings; it does not differentiate between the two.
Report Credit Union Dividends
Gather the documents necessary to report the dividends received for the year on your credit union account. The credit union must provide Form 1099-INT or Form 1099-DIV by January 31st of each year for tax preparation purposes. However, if you do not receive either of these forms, the December statement for the account should include the year-to-date dividends received on the account.
Review the documents and verify the dividends received on the account for the year.
Report the dividends received on IRS Schedule B -- Interest and Ordinary Dividends. Even though the credit union is reporting dividends, for IRS purposes you will report these dividends as interest. The terminology for credit unions is different from that of traditional banks due to the account holders holding ownership interests in the credit unions. However, the IRS does not consider "dividends" paid by a credit union any different than interest paid by traditional banks.
Enter the credit union name on line 1 of Schedule B, Part I -- Interest. Enter the amount of dividends received during the year in the "Amount" column of Schedule B.
Report other interest as necessary on Schedule B. Calculate the total interest received on line 4 of Schedule B and line 8a of Form 1040. The dividends received from the credit union will now be reflected in the income you report to the IRS.
