You can expect to receive a Form 1099-DIV if you’ve been paid dividends on stocks, or had capital gains distributions on mutual fund investments during the tax year. The different boxes on the Form 1099-DIV are:
- Box 1a: reports the full amount of ordinary dividends paid
- Box 1b: reports the amount of the sum listed in box 1a that are qualified dividends.
- Box 2a: reports capital gains distributions form mutual fund investments
- Box 4: reports the amount of federal tax withheld from distributions
- Box 14: reports the amount of state tax withheld from distributions
Ordinary and Qualified Dividends
By subtracting the amount of qualified dividends listed in Box 1b from the total amount of ordinary dividends in Box 1a, you can determine the amount of dividends which will be taxed at ordinary rates.
Dividends that are qualified are subject to being taxed as long-term capital gains. If your largest tax bracket is 15%, the dividends won’t be taxed. However, if your marginal tax rate is greater than 15%, your qualified dividends are taxed at rates from 15, 20, or 23.8%, dependent on your annual income.
Qualified dividends must be paid by a United States corporation and you are required to own the stock for longer than 60 days. Other requirements may apply.
Any amount reported in Box 2a, mutual fund distributions, is considered a long-term capital gain for tax purposes. The tax implications that apply to qualified dividends also apply to distributions of mutual fund capital gains, though there is no requirement of how long you need to have the investment.
Schedule B Implications
If you receive a 1099-DIV in preparation of the tax season, you may need to attach a completed Schedule B to your tax return. This is required if the total amount of your dividends paid , as reported in box 1a, is greater than $1,500.