Get to know all about IRS Form 1099-DIV. What is it and why is it required? Learn everything related to IRS Form 1099-DIV; its importance in taxes, how to file, and how dividends and distributions are related to it.
The IRS 1099-DIV form has three copies: A which is in red and B which has two parts. As such, there is a high chance that you often find it difficult to grasp and file accurately. Our ultimate guide for IRS Form 1099-DIV will provide you with all the necessary information required to file this form and let your earned dividends rest safe in your bank account.
What Is IRS Form 1099-DIV?
IRS Form 1099-DIV is a financial document that is used by institutions in order to report distributions and dividends to the investor (you) as well as the IRS. If you have dividend-paying stocks in your account or even a mutual fund that brings back certain capital gains distribution (of more than $10), then the IRS will definitely send you an IRS Form 1099-DIV.
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What Are The Other Types of Form 1099?
The IRS Form 1099-DIV is just one of the various 1099-DIV forms available. There are 8 other types of Form 1099 and below we have explained them one by one:
- Form 1099-A
- Form 1099-C
- Form 1099-G
- Form 1099-INT
- Form 1099-MISC
- Form 1099-NEC
- Form 1099-R
- Form SSA-1099
1. Form 1099-A
Lenders send you the Form 1099-A when you are a homeowner and you have paid for foreclosure of a property that you had bought by taking a loan from them. This form is sent both to you as well as to the IRS. This intimates the IRS and you that you are no longer responsible for considering the balance as taxable income.
2. Form 1099-C
Creditors use Form 1099-C in order to intimate those who have taken any loan from them that they have cancelled the debt. If any creditor forgives a debt of $600 or more, you can expect them to send a Form 1099-C to you.
3. Form 1099-G
This form is used by federal, state, or local governments to file a report of particular payments that have been made to taxpayers. These can include unemployment compensation and state or even local income tax offsets, deductions of money, or credits.
4. Form 1099-INT
This form is used by financial institutions such as banks in order to keep a record of money that you earned as interest (if it is more than $10) from the savings account, money market account, or certificate of deposit (CD).
5. Form 1099-MISC
This form is for all the miscellaneous income sources whose records must be maintained. These include salesperson incentives, awards, compensations, and even taxable damages from any lawsuit. It is also used to keep records of medical and attorney payments and all transactions related to the agro and fishing industry. This form was earlier also used by companies to pay contractors and freelancers. But since 2020, a new form has been introduced for this reason.
6. Form 1099-NEC
Companies now use Form 1099-NEC in order to keep records of payments of more than $600 that they made to contractors and freelancers engaged with them. This was introduced in 2020.
7. Form 1099-R
This form will be sent if distributions from a retirement account or annuity get to be more than $10. It is important to note that you will still get this form even if the income is not taxable.
8. Form SSA-1099
This form is used to report Social Security returns even if they are not taxable.
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5 Important Things You Should Know About IRS Form 1099-DIV
Here are 5 important things you should know about IRS Form 1099-DIV in 2022:
1. It gets sent to both the investor (you) and the IRS by financial institutions.
2. It only gets sent if you have a mutual fund or other investment gains of more than $10.
3. There are 8 boxes in the IRS Form 1099-DIV that you will have to fill. These include:
- Box 1a (all the dividends from each payor)
- Box 1b (qualified dividends)
- Box 2a (capital gains distribution and mutual funds gains)
- Box 3 (non-dividend distributions)
- Box 5 (Section 199A dividends)
- Box 7 (foreign tax paid)
- Box 11 (tax-exempt dividends)
- Box 12 (tax-exempt interest dividends)
4. This form has an immense amount of tax information that will assist you to file your tax returns successfully with the help of Schedule B.
5. Note that you must check with all companies from which you are entitled to get money if they do not send IRS Form 1099-DIV by January 31 of every year.
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What Are Dividends and Distributions? Are They Important?
Both distributions and dividends are ways in which corporate institutions pay back income to the owners, but they have certain differences.
Dividends are a portion of the profits that the company earns. They can be paid in cash but maybe shares as well. These payments are not predictable and they can vary every year. They are like rewards when the company performs well. Distributions are also payments made from company profits but they go to the S corp and not the C corp.
These are both important as they ensure that the profits get evenly distributed amongst the shareholders and that there is no chance of foul play.
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How Are Dividends and Distributions Related To Form 1099-DIV?
The IRS (Internal Revenue Service) Form 1099-DIV is sent to any and all investors who earn dividends and distributions from any kind of investment during a financial year. You will only receive the form if the dividend earned is above $10. All IRS forms must be present during the tax filing process.
Who Can File IRS Form 1099-DIV, Dividends and Distributions?
Companies are required to provide a copy of the 1099-DIV form to investors and the IRS by January 31 of every calendar year. The form is then supposed to be filed by the investor.
What Are The Requirements For IRS Form 1099-DIV?
- The investor and the IRS both will receive the form from the companies.
- You will only get this form if the dividends earned are more than $10.
- File the form using Schedule B to avoid any tax trouble.
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How To File IRS Form 1099-DIV, Dividends and Distributions?
Form 1099-DIV has 3 copies:
- Copy A is all in red and is only for informational purposes
- Two sections of Copy B must be downloaded and printed for use. One is for the recipient and the other is for the state or local tax department.
The recipient must fill this form which is in black on a Schedule B form or directly on Form 1040. For $1500 or greater dividends, a Schedule B form is mandatory.