How Does a 1099-DIV Affect Taxes?

IRS Form 1099-DIV is a common tax form that reports your annual dividend payments. You may receive a 1099-DIV from your brokerage if your stocks, mutual funds or real estate investment trusts (REITs) share their profits. While you don’t have to file it with the IRS, you’ll need the information to fill out your tax return.

🤔 Understanding 1099-DIVs

Dividends are payments that companies, mutual funds, and REITs pay investors out of their profits. Generally, the IRS considers dividends as taxable income, which means you’ll have to share the proceeds with Uncle Sam.

If you receive more than $10 in dividends from a financial entity (like your brokerage) or $600 from an individual company, they’ll send you a 1099-DIV in February. They’ll also submit a copy to the IRS, saving you the hassle of filing the form yourself.

Form 1099-DIV is a financial record of the dividends and related payments you’ve received in a given year. Your form will break down how much you received in various boxes. Each box corresponds to a particular section of your tax return, making it easier to file come April.

Your 1099-DIV can majorly impact your tax life—but receiving one doesn’t necessarily mean you owe taxes. (For example, dividends paid into many retirement accounts are tax deferred.) That’s why it’s crucial to understand how to read the form and accurately report the information to the IRS.

How does a 1099-DIV affect your taxes?

1099-DIVs list three primary types of income. Each has different implications for your tax rate and annual return filing.

Ordinary (nonqualified) dividends

Ordinary dividends are paid from a company or REIT’s profits. These dividends are taxed at your normal income tax bracket, which may range from 10% to 37%. You’ll find ordinary dividends in Box 1a.

Qualified dividends

Qualified dividends are paid out by U.S. or qualified foreign corporations to investors who have met the holding period requirement for their shares. Qualified dividends are taxed at the long-term capital gains tax rate, which is usually lower than normal income tax rates. You’ll find qualified dividends reported in Box 1b.

Capital gains distributions

Capital gains distributions are usually paid out by mutual funds when they sell their underlying holdings. Generally, you’ll pay long-term capital gains on these distributions (regardless of how long you’ve owned your shares). You’ll find your capital gains distributions reported in Box 2a.

Other boxes to consider

Of course, these aren’t all the boxes listed on your 1099-DIV. Among others, your IRS Form will also report:

  • Dividends paid by REITs and REIT-owning mutual funds
  • Nondividend distributions
  • Taxes paid to foreign countries on your dividends
  • And whether state or federal taxes were withheld on your dividends

What this means for you

Your IRS Form 1099-DIV is a common form that details your annual dividend payouts. You’ll need the information to accurately fill out your tax return and assess your tax liability (and avoid drawing the ire of the IRS). While it looks complicated at first, the form pairs nicely with your tax return to tell you how to report your dividend payments.

That said, not every company is required to send you a 1099-DIV even if you received payments. Ultimately, it’s up to you to track your annual dividends and ensure that Uncle Sam gets his share.

Related Qbits

Learn everything about Q.ai Investment Kits and how they help build wealth

Level up your investment game

In just 2 minutes, iQ will help you become the expert your friends go to for investing advice.

Level Up your Investment Game
Tryq Logo






Terms of Use

Form ADV




Fintech Breakthrough Award

Best Retail Investment Company

AI Breakthrough Award

Best Deep Learning Platform

AIBenzinga Global Fintech


Product Hunt’s Golden Kitty

Semi-Finalist – Fintech

Product Hunt

#1 Product of the Day

Product Hunt

#2 Product of the Week

Q.ai is the trade name of Quantalytics Holdings, LLC Quantalytics. Quantalytics offers automated financial advice tools through Quantalytics Investment Advisors, LLC (“QAI”), a SEC registered investment advisor. QIA’s Investment advisory services will be available only to residents of the United States. Disclosures concerning QIA’s investment advisory services are available on its Form ADV filed with the SEC. The parent company of ForbesMedia LLC, Forbes Global Media Holdings Inc. ("Forbes") has a material ownership interest in Quantalytics. Forbes does not give representation nor warranty with respect to the accuracy or completeness of the content on this website. The content on this website is for informational purposes only and does not constitute a comprehensive description of Q.ai`s investment advisory services. By using this website, you understand the information being presented is provided for informational purposes only and agree to our Terms of Use and Privacy Policy. QAI relies on information from various sources believed to be reliable, including clients and third parties, but cannot guarantee the accuracy and completeness of that information. Nothing in this communication should be construed as an offer, recommendation, or solicitation to buy or sell any security. No representation or warranty can be given with respect to the accuracy or completeness of the information, and is subject to updating, revision, and amendment. Additionally, QAI or its affiliates do not provide tax advice and investors are encouraged to consult with their personal tax advisors. All investing involves risk, including the possible loss of money you invest. Past performance doesn’t guarantee future performance. © 2023 Quantalytics Holdings, LLC. All Rights Reserved.

Copyright © 2023 Q.AI LLC. All rights reserved

We use cookies to provide you with the best experience and show you relevant advertising. Learn more.