If you are a U.S. citizen with dividend income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt by U.S. law. This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer.taxmap/pub17/p17-036.htm#TXMP084427b4
This chapter discusses the tax treatment of:
- Ordinary dividends,
- Capital gain distributions,
- Nondividend distributions, and
- Other distributions you may receive from a corporation or a mutual fund.
This chapter also explains how to report dividend income on your tax return.
Dividends are distributions of money, stock, or other property paid to you by a corporation. You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. However, some amounts you receive that are called dividends are actually interest income. (See Dividends that are actually interest
under Taxable Interest
in chapter 7.)
Most distributions are paid in cash (or check). However, distributions can consist of more stock, stock rights, other property, or services.taxmap/pub17/p17-036.htm#TXMP29455a69
You may want to see:
Publication 514 Foreign Tax Credit for Individuals 550 Investment Income and Expenses 564 Mutual Fund Distributions Form (and Instructions) Schedule B (Form 1040A or 1040) : Interest and Ordinary Dividendstaxmap/pub17/p17-036.htm#en_us_publink1000171566
This section discusses general rules for dividend income.taxmap/pub17/p17-036.htm#en_us_publink1000171567
Part of a child's 2009 investment income may be taxed at the parent's tax rate. If it is, Form 8615, Tax for Certain Children With Investment Income of More Than $1,900, must be completed and attached to the child's tax return. If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate.
Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. If you can, use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose.
For more information about the tax on investment income of children and the parents' election, see chapter 31
Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc., from the fiduciary. Your copy of Schedule K-1 and its instructions will tell you where to report the income on your Form 1040. taxmap/pub17/p17-036.htm#en_us_publink1000171570
You must give your name and SSN (or individual taxpayer identification number (ITIN)) to any person required by federal tax law to make a return, statement, or other document that relates to you. This includes payers of dividends. If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. taxmap/pub17/p17-036.htm#en_us_publink1000171572
Your dividend income is generally not subject to regular withholding. However, it may be subject to backup withholding to ensure that income tax is collected on the income. Under backup withholding, the payer of dividends must withhold, as income tax, 28% of the amount you are paid.
Backup withholding may also be required if the Internal Revenue Service (IRS) has determined that you underreported your interest or dividend income. For more information, see Backup Withholding
in chapter 4.
If two or more persons hold stock as joint tenants, tenants by the entirety, or tenants in common, each person's share of any dividends from the stock is determined by local law. taxmap/pub17/p17-036.htm#en_us_publink1000171575
Most corporations use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. Keep this form with your records. You do not have to attach it to your tax return.taxmap/pub17/p17-036.htm#en_us_publink1000171576
Even if you do not receive Form 1099-DIV, you must still report all of your taxable dividend income. For example, you may receive distributive shares of dividends from partnerships or S corporations. These dividends are reported to you on Schedule K-1 (Form 1065) and Schedule K-1 (Form 1120S).taxmap/pub17/p17-036.htm#en_us_publink1000171577
If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. taxmap/pub17/p17-036.htm#en_us_publink1000171578
If someone receives distributions as a nominee for you, that person will give you a Form 1099-DIV, which will show distributions received on your behalf.taxmap/pub17/p17-036.htm#en_us_publink1000171579
Certain substitute payments in lieu of dividends or tax-exempt interest that are received by a broker on your behalf must be reported to you on Form 1099-MISC, Miscellaneous Income, or a similar statement. See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments.taxmap/pub17/p17-036.htm#en_us_publink1000171580
If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. The new Form 1099 you receive will be marked "Corrected." taxmap/pub17/p17-036.htm#en_us_publink1000171581
If stock is sold, exchanged, or otherwise disposed of after a dividend is declared, but before it is paid, the owner of record (usually the payee shown on the dividend check) must include the dividend in income. taxmap/pub17/p17-036.htm#en_us_publink1000171582
If a mutual fund (or other regulated investment company) or real estate investment trust (REIT) declares a dividend (including any exempt-interest dividend or capital gain distribution) in October, November, or December payable to shareholders of record on a date in one of those months but actually pays the dividend during January of the next calendar year, you are considered to have received the dividend on December 31. You report the dividend in the year it was declared.