IRS 1099 Dividend Form Instructions

IRS 1099 Dividend Form Instructions: Banks use the 1099-DIV Tax Form to report dividends and other distributions to recipients and the IRS. Dividends are distributions of property by a corporation to the shareholder or owner of the corporation out of the income or profits of the corporation. Normally, dividends are paid in the form of cash but may be paid in other types of property. Particular dividends can be classified as Qualified Dividends. Qualified dividends are taxed at lower capital gains tax rates. Ordinary Dividends are taxed as ordinary income and are subject to regular tax rates.

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IRS 1099 Dividend Form Instructions

1099-DIV Information Return sent by banks and other financial institutions to investors. Investors receive a 1099-DIV Tax Form from any type of investment during a year. Investors can get several 1099-DIVs. Each IRS 1099-DIV form should report on an investor’s tax filing.

Particular types of investment accounts are exempt from providing an IRS Form 1099-DIV 2021. Individual retirement accounts, money purchase pension plans, profit-sharing plans, and various retirement accounts are exempt from providing the 1099-DIV Form. If cumulative dividends are not greater than $10, then investors typically will not get a 1099-DIV form. Banks and other financial institutions that provide the 1099-DIV Form must file with accurate details by following IRS 1099-DIV instructions.

IRS 1099 Dividend Form types

Each box of the IRS Form 1099-DIV contains details that the taxpayer may need to complete their tax return.

Ordinary Dividends

Box 1a of 1099-DIV was used to report the whole amount of ordinary dividends. Ordinary Dividends used the report on Form 1040, Line 3b. The parts of Ordinary Dividends that are measured to be Qualified Dividends are taxed at the lower capital gain rates.

Qualified Dividends

Box 1b reports the section of box 1a that is considered to be qualified dividends. Qualified Dividends used to report on Form 1040, Line 3a. A qualified dividend is taxed at the lower capital gains tax rate.

Total Capital Gain Distributions

If your mutual fund makes a distribution of its investment earnings to you, then it will be reported in box 2a of Form 1099-DIV. Generally, the IRS allows you to treat the distribution like a long-term capital gain. This is helpful because the same tax rules that apply to qualified dividends also apply to mutual fund capital gain distributions.

Unrecaptured Section 1250 Gain

Box 2b contains the part of box 2a. Box 2b used for reporting Unrecaptured Section 1250 Gain. Unrecaptured Section 1250 Gain from particular depreciable real property.

Section 1202 gain

Box 2c contains the portion of box 2a. Box 2cis used to report Section 1202 gain from particular small business stock. These payments may be subject to prohibition from income Total Capital Gain Distributions from a regulated investment or a real estate investment trust (REIT).

Collectibles Gain

Box 2d used to report the 28% rate gain from sales or exchanges of collectibles.

Non-Dividend Distributions of Form 1099-DIV

Box 3 is used for reporting Non-Dividend Distributions. Non-Dividend Distributions show any distribution to the investor/taxpayer from the underlying entity that is not made from the earnings of the entity but is a return of the cost or basis in the investment. Generally, that type of return of the cost/basis of an investment is not taxable and will decrease the basis in the investment. However, the excess would be treated as a capital gain transaction if the non-dividend distribution exceeds the cost basis of the investment.

IRS 1099 Dividend Form Federal Tax Withholdings

1099 DIV Box 4 used for reporting Federal Tax Withholdings including any backup withholdings that were withheld out of the interest paid on the investment.

Section 199A Dividends

Box 5 displays dividends that are qualified for the 20% qualified business income deduction under section 199A.

Investment Expenses

Box 6 of the Federal Tax 1099-DIV Form contains information on the taxpayer’s share of any investment expenses. Generally, these expenses are from a non-publicly offered mutual fund.

Foreign Tax Paid Of IRS 1099 Dividend Form

1099 Dividend Form Box 7 contains the Foreign Tax Paid out of the dividends on the investment. This amount may be used to decide if the taxpayer can claim either a foreign tax credit on Form 1116.

Foreign country or U.S. possession

Box 8 of 1099-DIV Form 2021 contains the foreign country or U.S. possession that the foreign tax reported in Box 7 of Form 1099 Dividends paid.

Cash Liquidation Distributions

Box 9 is used to report the Cash Liquidation Distributions. Cash Liquidation Distributions represent the cash the investor/taxpayer obtained upon liquidation of all or part of the underlying entity. Generally, the cash distribution has measured a return of the cost or basis in the investment. Also, the excess would be treated as a capital gain transaction if the total distribution exceeds the cost basis of the investment.

Non-Cash Liquidation Distributions

Non-Cash Liquidation Distributions used to report in box 10 of 1099-DIV 2021. It represents the property other than cash that the investor/taxpayer received upon liquidation of all or part of the underlying entity. Generally, the distribution of this property to an investor considers a return of the cost or basis in the investment. Such distributions will decrease the basis of the investment. Also, if the distribution crosses the cost basis in the investment, the excess would treat as a capital gain transaction.

Exempt-interest Dividends

Box 11 is used for reporting the tax-exempt dividends paid. This payment is entered on Line 2a, Form 1040.

Specified Private Activity Bond Dividends

1099-DIV Box 12 contains the Specified Private Activity Bond Dividends. This amount is included in the Box 11 amounts but will be subject to the Alternative Minimum Tax and be listed on Form 6251.

State Information

Box 13 – 15 contains the State Number, State Identification Number, and State Withholding Information respectively.


1099 filer must follow the IRS 1099-Div instruction to file the dividends and distributions form. Also, enter the payment in the appropriate box and file it before the due date to the IRS and recipient to avoid penalties.

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