Will the IRS catch a missing Form 1099 DIV? Have you invested in shares in an organization? Do you earn distributions? You will receive a 1099 DIV Form at the year-end. Yes, the dividends you earn apart from regular salary or wages.
Getting tense? Don’t worry! Receiving information return a tedious task. We will let you know the circumstances in which you receive a 1099 DIV. We also provide you with information about the reasons behind IRS audits. Read the complete article to know Will the IRS catch a missing Form 1099 DIV?
Table of Contents
- When do you receive a 1099 Dividend Form?
- Why will I get audited I forgot 1099 Dividend information?
- Do I need to report 1099 DIV income if I didn’t receive 1099?
- What if your 1099 DIV Tax Form reports an incorrect amount?
- What you should do to avoid IRS audits on 1099 DIV income?
When do you receive a 1099 Dividend Form?
At the end of January, you will receive Form 1099 DIV for receiving dividends on the investments of shares or stocks $10 or more. Furthermore, the bank, mutual fund organizations, or any financial institutions issue these tax forms. Dividends are the organization’s profits distributed to the shareholders. Here are the circumstances in which you will receive an IRS DIV:
- Capital gain dividends or exempt-interest dividends or any other distributions paid to an individual in money or other property.
- Withheld or paid foreign tax on dividends or distributions.
- Paid money or other property as a part of a liquidation.
Why will I get audited I forgot 1099 Dividend information?
1099 information returns remind and notify you to report the income on your tax returns annually. Because these 1099 Tax Forms sent to the individuals and the IRS every tax year. The IRS matches every 1099 DIV with your SSN. In this way, the IRS can easily find out an underreported income.
If you forget to include the distributions you received throughout the tax year, then the IRS can spew out a tax bill. Hence, you get audited or you receive a tax notice from the IRS stating “unreported 1099 income”. Thus, the best way to avoid receiving notices from the IRS to report 1099 income on the tax return.
Do I need to report 1099 DIV income if I didn’t receive 1099?
Yes, you need to report income earned apart from the regular salary on the tax return. Generally, you will receive a 1099 DIV Form if the income you have received meets the reporting threshold. Suppose, if you earned income less than the minimum reporting threshold, then you’ll not receive 1099.
But this doesn’t mean these payments are exempted from reporting 1099 income on the tax return. Instead, it will become underreported income. Therefore, you will end up paying penalties and heavy and hefty fines. Because the IRS recommends every individual to report the income on their tax return even if they didn’t receive 1099.
What if your 1099 DIV Tax Form reports an incorrect amount?
Generally, every 1099 Tax Form is issued to you and the IRS. So, if you receive a 1099 DIV with an incorrect amount reported, then you get audited. Yes, the IRS considers that not including the income earned in the form of distributions.
Hence, the IRS sends you notices to pay penalties. To avoid unwanted penalties, contact the payer and tell them to correct the mistake. Otherwise, contact the IRS by providing the proof of payments you received in a tax year. Thus, by contracting immediately with your payer or the IRS you can minimize the chances of unwanted penalties.
What you should do to avoid IRS audits on 1099 DIV income?
To avoid, IRS audits follow the below steps:
- Determine whether you work as a contractor or employee. If you work as an employee, then employers withhold taxes on your behalf. In case, if you work as a contractor, report the income on the tax returns.
- Check your mail whether you have received a 1099 Tax Form or not.
- If in case, you didn’t receive and the income you have earned throughout the year $400 or more, then include the income on the tax return.
- When you receive a 1099 Form, check the amount reported on the tax form whether correct or not. Otherwise, contact the payer and request a corrected 1099 Tax Form.
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