What is Form 1099-DIV

Form 1099-DIV is a form sent to investors who have received distributions from any type of investment during a calendar year. Investors can receive multiple 1099-DIVs. Each Form 1099-DIV should be reported on an investor’s tax filing.

BREAKING DOWN Form 1099-DIV

Form 1099-DIV is one of many 1099 forms an individual may accumulate for a given tax year. Investors may receive numerous 1099-DIV forms since they are provided by each platform where an investor has investment holdings.

Investment platforms are required to provide a 1099-DIV by January 31 each year. Companies provide a copy of the Form 1099-DIV to the investor and the IRS. Certain types of investment accounts are exempt from issuing a Form 1099-DIV. Exempt accounts include individual retirement accounts, money purchase pension plans, profit-sharing plans and various other retirement accounts. Investors typically will not receive a 1099-DIV if cumulative dividends are not greater than $10.

1099-DIV Categories

Most investors receiving a Form 1099-DIV will have ordinary dividends, qualified dividends or total capital gains. Other categories for investors include: unrecaptured section 1250 gain, section 1202 gain, collectibles gain, nondividend distributions, federal income tax withheld, investment expenses, foreign tax paid, foreign country or U.S. possession, cash liquidation distributions, noncash liquidation distributions, exempt-interest dividends, specified private activity bond interest dividends and state tax withheld. Investors may also be subject to FATCA filing requirements for foreign accounts. A copy of Form 1099-DIV for 2018 can be found here.

Tax Filing

Investors will need to file each 1099-DIV they receive on their annual tax form. This can be done on a Schedule B or directly on the Form 1040. Dividends are taxed at an investor’s income tax rate with a few exceptions. Qualified dividends are the primary exception. Qualified dividends have met certain criteria that allow them to be taxed at a lower tax rate.

The tax rate on capital gains may also vary from the ordinary income tax rate. Short-term capital gains are taxed at the ordinary income tax rate, but long-term capital gains will pay lower taxes. (See also: Comparing Long-Term vs. Short-Term Capital Gains Tax Rates.) Charles Schwab provides a breakdown of the 2017 tax rates for distributions here.

U.S. Tax Reform

U.S. tax reform legislation has enacted many new tax changes for both corporations and individuals in 2018. Tax brackets and rates can be found here. Legislation for tax rates in 2018 does not include any major changes to capital gains and dividends.