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File 1040nr Ez Online

File 1040nr ez online 8. File 1040nr ez online   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. File 1040nr ez online Reporting tax withheld. File 1040nr ez online Nominees. File 1040nr ez online Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. File 1040nr ez online Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. File 1040nr ez online Alternative minimum tax treatment. File 1040nr ez online How To Report Dividend IncomeInvestment interest deducted. File 1040nr ez online Reminder Foreign-source income. File 1040nr ez online  If you are a U. File 1040nr ez online S. File 1040nr ez online citizen with dividend income from sources outside the United States (foreign-source income), you must report that income on your tax return unless it is exempt by U. File 1040nr ez online S. File 1040nr ez online law. File 1040nr ez online 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. File 1040nr ez online Introduction 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. File 1040nr ez online This chapter also explains how to report dividend income on your tax return. File 1040nr ez online Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. File 1040nr ez online You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. File 1040nr ez online However, some amounts you receive that are called dividends are actually interest income. File 1040nr ez online (See Dividends that are actually interest under Taxable Interest in chapter 7. File 1040nr ez online ) Most distributions are paid in cash (or check). File 1040nr ez online However, distributions can consist of more stock, stock rights, other property, or services. File 1040nr ez online Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 550 Investment Income and Expenses Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends General Information This section discusses general rules for dividend income. File 1040nr ez online Tax on unearned income of certain children. File 1040nr ez online   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. File 1040nr ez online If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. File 1040nr ez online If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. File 1040nr ez online    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. File 1040nr ez online Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. File 1040nr ez online   For more information about the tax on unearned income of children and the parents' election, see chapter 31. File 1040nr ez online Beneficiary of an estate or trust. File 1040nr ez online    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. File 1040nr ez online You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. File 1040nr ez online , from the fiduciary. File 1040nr ez online Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. File 1040nr ez online Social security number (SSN) or individual taxpayer identification number (ITIN). File 1040nr ez online    You must give your SSN or ITIN to any person required by federal tax law to make a return, statement, or other document that relates to you. File 1040nr ez online This includes payers of dividends. File 1040nr ez online If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. File 1040nr ez online For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. File 1040nr ez online Backup withholding. File 1040nr ez online   Your dividend income is generally not subject to regular withholding. File 1040nr ez online However, it may be subject to backup withholding to ensure that income tax is collected on the income. File 1040nr ez online Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. File 1040nr ez online   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. File 1040nr ez online For more information, see Backup Withholding in chapter 4. File 1040nr ez online Stock certificate in two or more names. File 1040nr ez online   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. File 1040nr ez online Form 1099-DIV. File 1040nr ez online   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. File 1040nr ez online Keep this form with your records. File 1040nr ez online You do not have to attach it to your tax return. File 1040nr ez online Dividends not reported on Form 1099-DIV. File 1040nr ez online   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. File 1040nr ez online For example, you may receive distributive shares of dividends from partnerships or S corporations. File 1040nr ez online These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. File 1040nr ez online , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. File 1040nr ez online Reporting tax withheld. File 1040nr ez online   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. File 1040nr ez online Nominees. File 1040nr ez online   If someone receives distributions as a nominee for you, that person should give you a Form 1099-DIV, which will show distributions received on your behalf. File 1040nr ez online Form 1099-MISC. File 1040nr ez online   Certain substitute payments in lieu of dividends or tax-exempt interest received by a broker on your behalf must be reported to you on Form 1099-MISC, Miscellaneous Income, or a similar statement. File 1040nr ez online See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. File 1040nr ez online Incorrect amount shown on a Form 1099. File 1040nr ez online   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. File 1040nr ez online The new Form 1099 you receive will be marked “Corrected. File 1040nr ez online ” Dividends on stock sold. File 1040nr ez online   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. File 1040nr ez online Dividends received in January. File 1040nr ez online   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. File 1040nr ez online You report the dividend in the year it was declared. File 1040nr ez online Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. File 1040nr ez online They are paid out of earnings and profits and are ordinary income to you. File 1040nr ez online This means they are not capital gains. File 1040nr ez online You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. File 1040nr ez online Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. File 1040nr ez online Qualified Dividends Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. File 1040nr ez online They should be shown in box 1b of the Form 1099-DIV you receive. File 1040nr ez online The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. File 1040nr ez online 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. File 1040nr ez online 6%. File 1040nr ez online 20% on any amount that otherwise would be taxed at a 39. File 1040nr ez online 6% rate. File 1040nr ez online To qualify for the maximum rate, all of the following requirements must be met. File 1040nr ez online The dividends must have been paid by a U. File 1040nr ez online S. File 1040nr ez online corporation or a qualified foreign corporation. File 1040nr ez online (See Qualified foreign corporation , later. File 1040nr ez online ) The dividends are not of the type listed later under Dividends that are not qualified dividends . File 1040nr ez online You meet the holding period (discussed next). File 1040nr ez online Holding period. File 1040nr ez online   You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. File 1040nr ez online The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. File 1040nr ez online Instead, the seller will get the dividend. File 1040nr ez online   When counting the number of days you held the stock, include the day you disposed of the stock, but not the day you acquired it. File 1040nr ez online See the examples later. File 1040nr ez online Exception for preferred stock. File 1040nr ez online   In the case of preferred stock, you must have held the stock more than 90 days during the 181-day period that begins 90 days before the ex-dividend date if the dividends are due to periods totaling more than 366 days. File 1040nr ez online If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. File 1040nr ez online Example 1. File 1040nr ez online You bought 5,000 shares of XYZ Corp. File 1040nr ez online common stock on July 9, 2013. File 1040nr ez online XYZ Corp. File 1040nr ez online paid a cash dividend of 10 cents per share. File 1040nr ez online The ex-dividend date was July 16, 2013. File 1040nr ez online Your Form 1099-DIV from XYZ Corp. File 1040nr ez online shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). File 1040nr ez online However, you sold the 5,000 shares on August 12, 2013. File 1040nr ez online You held your shares of XYZ Corp. File 1040nr ez online for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). File 1040nr ez online The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. File 1040nr ez online You have no qualified dividends from XYZ Corp. File 1040nr ez online because you held the XYZ stock for less than 61 days. File 1040nr ez online Example 2. File 1040nr ez online Assume the same facts as in Example 1 except that you bought the stock on July 15, 2013 (the day before the ex-dividend date), and you sold the stock on September 16, 2013. File 1040nr ez online You held the stock for 63 days (from July 16, 2013, through September 16, 2013). File 1040nr ez online The $500 of qualified dividends shown in box 1b of your Form 1099-DIV are all qualified dividends because you held the stock for 61 days of the 121-day period (from July 16, 2013, through September 14, 2013). File 1040nr ez online Example 3. File 1040nr ez online You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. File 1040nr ez online ABC Mutual Fund paid a cash dividend of 10 cents a share. File 1040nr ez online The ex-dividend date was July 16, 2013. File 1040nr ez online The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. File 1040nr ez online Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. File 1040nr ez online However, you sold the 10,000 shares on August 12, 2013. File 1040nr ez online You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. File 1040nr ez online Holding period reduced where risk of loss is diminished. File 1040nr ez online   When determining whether you met the minimum holding period discussed earlier, you cannot count any day during which you meet any of the following conditions. File 1040nr ez online You had an option to sell, were under a contractual obligation to sell, or had made (and not closed) a short sale of substantially identical stock or securities. File 1040nr ez online You were grantor (writer) of an option to buy substantially identical stock or securities. File 1040nr ez online Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. File 1040nr ez online   For information about how to apply condition (3), see Regulations section 1. File 1040nr ez online 246-5. File 1040nr ez online Qualified foreign corporation. File 1040nr ez online   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. File 1040nr ez online The corporation is incorporated in a U. File 1040nr ez online S. File 1040nr ez online possession. File 1040nr ez online The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose and that includes an exchange of information program. File 1040nr ez online For a list of those treaties, see Table 8-1. File 1040nr ez online The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States. File 1040nr ez online See Readily tradable stock , later. File 1040nr ez online Exception. File 1040nr ez online   A corporation is not a qualified foreign corporation if it is a passive foreign investment company during its tax year in which the dividends are paid or during its previous tax year. File 1040nr ez online Readily tradable stock. File 1040nr ez online   Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement (3) under Qualified foreign corporation , if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. File 1040nr ez online For a list of the exchanges that meet these requirements, see www. File 1040nr ez online sec. File 1040nr ez online gov/divisions/marketreg/mrexchanges. File 1040nr ez online shtml. File 1040nr ez online Dividends that are not qualified dividends. File 1040nr ez online   The following dividends are not qualified dividends. File 1040nr ez online They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. File 1040nr ez online Capital gain distributions. File 1040nr ez online Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. File 1040nr ez online S. File 1040nr ez online building and loan associations, U. File 1040nr ez online S. File 1040nr ez online savings and loan associations, federal savings and loan associations, and similar financial institutions. File 1040nr ez online (Report these amounts as interest income. File 1040nr ez online ) Dividends from a corporation that is a tax-exempt organization or farmer's cooperative during the corporation's tax year in which the dividends were paid or during the corporation's previous tax year. File 1040nr ez online Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation. File 1040nr ez online Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. File 1040nr ez online Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. File 1040nr ez online Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. File 1040nr ez online Table 8-1. File 1040nr ez online Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. File 1040nr ez online Australia Indonesia Romania Austria Ireland Russian Bangladesh Israel Federation Barbados Italy Slovak Belgium Jamaica Republic Bulgaria Japan Slovenia Canada Kazakhstan South Africa China Korea Spain Cyprus Latvia Sri Lanka Czech Lithuania Sweden Republic Luxembourg Switzerland Denmark Malta Thailand Egypt Mexico Trinidad and Estonia Morocco Tobago Finland Netherlands Tunisia France New Zealand Turkey Germany Norway Ukraine Greece Pakistan United Hungary Philippines Kingdom Iceland Poland Venezuela India Portugal     Dividends Used to Buy More Stock The corporation in which you own stock may have a dividend reinvestment plan. File 1040nr ez online This plan lets you choose to use your dividends to buy (through an agent) more shares of stock in the corporation instead of receiving the dividends in cash. File 1040nr ez online Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. File 1040nr ez online If you use your dividends to buy more stock at a price equal to its fair market value, you still must report the dividends as income. File 1040nr ez online If you are a member of a dividend reinvestment plan that lets you buy more stock at a price less than its fair market value, you must report as dividend income the fair market value of the additional stock on the dividend payment date. File 1040nr ez online You also must report as dividend income any service charge subtracted from your cash dividends before the dividends are used to buy the additional stock. File 1040nr ez online But you may be able to deduct the service charge. File 1040nr ez online See chapter 28 for more information about deducting expenses of producing income. File 1040nr ez online In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. File 1040nr ez online If you choose to do this, you must report as dividend income the difference between the cash you invest and the fair market value of the stock you buy. File 1040nr ez online When figuring this amount, use the fair market value of the stock on the dividend payment date. File 1040nr ez online Money Market Funds Report amounts you receive from money market funds as dividend income. File 1040nr ez online Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. File 1040nr ez online Capital Gain Distributions Capital gain distributions (also called capital gain dividends) are paid to you or credited to your account by mutual funds (or other regulated investment companies) and real estate investment trusts (REITs). File 1040nr ez online They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. File 1040nr ez online Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. File 1040nr ez online Undistributed capital gains of mutual funds and REITs. File 1040nr ez online    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. File 1040nr ez online You must treat your share of these gains as distributions, even though you did not actually receive them. File 1040nr ez online However, they are not included on Form 1099-DIV. File 1040nr ez online Instead, they are reported to you in box 1a of Form 2439. File 1040nr ez online   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. File 1040nr ez online   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. File 1040nr ez online You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. File 1040nr ez online Attach Copy B of Form 2439 to your return, and keep Copy C for your records. File 1040nr ez online Basis adjustment. File 1040nr ez online   Increase your basis in your mutual fund, or your interest in a REIT, by the difference between the gain you report and the credit you claim for the tax paid. File 1040nr ez online Additional information. File 1040nr ez online   For more information on the treatment of distributions from mutual funds, see Publication 550. File 1040nr ez online Nondividend Distributions A nondividend distribution is a distribution that is not paid out of the earnings and profits of a corporation or a mutual fund. File 1040nr ez online You should receive a Form 1099-DIV or other statement showing the nondividend distribution. File 1040nr ez online On Form 1099-DIV, a nondividend distribution will be shown in box 3. File 1040nr ez online If you do not receive such a statement, you report the distribution as an ordinary dividend. File 1040nr ez online Basis adjustment. File 1040nr ez online   A nondividend distribution reduces the basis of your stock. File 1040nr ez online It is not taxed until your basis in the stock is fully recovered. File 1040nr ez online This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. File 1040nr ez online If you buy stock in a corporation in different lots at different times, and you cannot definitely identify the shares subject to the nondividend distribution, reduce the basis of your earliest purchases first. File 1040nr ez online   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. File 1040nr ez online Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. File 1040nr ez online See Holding Period in chapter 14. File 1040nr ez online Example. File 1040nr ez online You bought stock in 2000 for $100. File 1040nr ez online In 2003, you received a nondividend distribution of $80. File 1040nr ez online You did not include this amount in your income, but you reduced the basis of your stock to $20. File 1040nr ez online You received a nondividend distribution of $30 in 2013. File 1040nr ez online The first $20 of this amount reduced your basis to zero. File 1040nr ez online You report the other $10 as a long-term capital gain for 2013. File 1040nr ez online You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. File 1040nr ez online Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. File 1040nr ez online These distributions are, at least in part, one form of a return of capital. File 1040nr ez online They may be paid in one or more installments. File 1040nr ez online You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. File 1040nr ez online For more information on liquidating distributions, see chapter 1 of Publication 550. File 1040nr ez online Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. File 1040nr ez online Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. File 1040nr ez online Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. File 1040nr ez online Taxable stock dividends and stock rights. File 1040nr ez online   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. File 1040nr ez online You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. File 1040nr ez online The distribution gives cash or other property to some shareholders and an increase in the percentage interest in the corporation's assets or earnings and profits to other shareholders. File 1040nr ez online The distribution is in convertible preferred stock and has the same result as in (2). File 1040nr ez online The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. File 1040nr ez online The distribution is on preferred stock. File 1040nr ez online (The distribution, however, is not taxable if it is an increase in the conversion ratio of convertible preferred stock made solely to take into account a stock dividend, stock split, or similar event that would otherwise result in reducing the conversion right. File 1040nr ez online )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. File 1040nr ez online If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. File 1040nr ez online Preferred stock redeemable at a premium. File 1040nr ez online   If you hold preferred stock having a redemption price higher than its issue price, the difference (the redemption premium) generally is taxable as a constructive distribution of additional stock on the preferred stock. File 1040nr ez online For more information, see chapter 1 of Publication 550. File 1040nr ez online Basis. File 1040nr ez online   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. File 1040nr ez online If you receive stock or stock rights that are not taxable to you, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550 for information on how to figure their basis. File 1040nr ez online Fractional shares. File 1040nr ez online    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. File 1040nr ez online However, with the approval of the shareholders, the corporation may set up a plan in which fractional shares are not issued but instead are sold, and the cash proceeds are given to the shareholders. File 1040nr ez online Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. File 1040nr ez online Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. File 1040nr ez online Enter your gain or loss, the difference between the cash you receive and the basis of the fractional shares sold, in column (h) of Schedule D (Form 1040) in Part I or Part II, whichever is appropriate. File 1040nr ez online    Report these transactions on Form 8949 with the correct box checked. File 1040nr ez online   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. File 1040nr ez online Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). File 1040nr ez online Example. File 1040nr ez online You own one share of common stock that you bought on January 3, 2004, for $100. File 1040nr ez online The corporation declared a common stock dividend of 5% on June 29, 2013. File 1040nr ez online The fair market value of the stock at the time the stock dividend was declared was $200. File 1040nr ez online You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. File 1040nr ez online You figure your gain or loss as follows: Fair market value of old stock $200. File 1040nr ez online 00 Fair market value of stock dividend (cash received) +10. File 1040nr ez online 00 Fair market value of old stock and stock dividend $210. File 1040nr ez online 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. File 1040nr ez online 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. File 1040nr ez online 76 Total $100. File 1040nr ez online 00 Cash received $10. File 1040nr ez online 00 Basis (cost) of stock dividend − 4. File 1040nr ez online 76 Gain $5. File 1040nr ez online 24 Because you had held the share of stock for more than 1 year at the time the stock dividend was declared, your gain on the stock dividend is a long-term capital gain. File 1040nr ez online Scrip dividends. File 1040nr ez online   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. File 1040nr ez online The certificate is generally nontaxable when you receive it. File 1040nr ez online If you choose to have the corporation sell the certificate for you and give you the proceeds, your gain or loss is the difference between the proceeds and the portion of your basis in the corporation's stock allocated to the certificate. File 1040nr ez online   However, if you receive a scrip certificate that you can choose to redeem for cash instead of stock, the certificate is taxable when you receive it. File 1040nr ez online You must include its fair market value in income on the date you receive it. File 1040nr ez online Other Distributions You may receive any of the following distributions during the year. File 1040nr ez online Exempt-interest dividends. File 1040nr ez online   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. File 1040nr ez online Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. File 1040nr ez online Information reporting requirement. File 1040nr ez online   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. File 1040nr ez online This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. File 1040nr ez online Alternative minimum tax treatment. File 1040nr ez online   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. File 1040nr ez online See Alternative Minimum Tax (AMT) in chapter 30 for more information. File 1040nr ez online Dividends on insurance policies. File 1040nr ez online    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. File 1040nr ez online However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. File 1040nr ez online    If dividends on an insurance contract (other than a modified endowment contract) are distributed to you, they are a partial return of the premiums you paid. File 1040nr ez online Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. File 1040nr ez online Report any taxable distributions on insurance policies on Form 1040, line 21. File 1040nr ez online Dividends on veterans' insurance. File 1040nr ez online   Dividends you receive on veterans' insurance policies are not taxable. File 1040nr ez online In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. File 1040nr ez online Patronage dividends. File 1040nr ez online   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. File 1040nr ez online   Do not include in your income patronage dividends you receive on: Property bought for your personal use, or Capital assets or depreciable property bought for use in your business. File 1040nr ez online But you must reduce the basis (cost) of the items bought. File 1040nr ez online If the dividend is more than the adjusted basis of the assets, you must report the excess as income. File 1040nr ez online   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. File 1040nr ez online Alaska Permanent Fund dividends. File 1040nr ez online    Do not report these amounts as dividends. File 1040nr ez online Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. File 1040nr ez online How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. File 1040nr ez online Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. File 1040nr ez online Report qualified dividends on line 9b of Form 1040 or Form 1040A. File 1040nr ez online If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. File 1040nr ez online See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. File 1040nr ez online If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. File 1040nr ez online You cannot use Form 1040EZ if you receive any dividend income. File 1040nr ez online Form 1099-DIV. File 1040nr ez online   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. File 1040nr ez online Even if you do not receive Form 1099-DIV, you must report all your dividend income. File 1040nr ez online   See Form 1099-DIV for more information on how to report dividend income. File 1040nr ez online Form 1040A or 1040. File 1040nr ez online    You must complete Schedule B (Form 1040A or 1040), Part II, and attach it to your Form 1040A or 1040, if: Your ordinary dividends (Form 1099-DIV, box 1a) are more than $1,500, or You received, as a nominee, dividends that actually belong to someone else. File 1040nr ez online If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. File 1040nr ez online   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. File 1040nr ez online If your securities are held by a brokerage firm (in “street name”), list the name of the brokerage firm shown on Form 1099-DIV as the payer. File 1040nr ez online If your stock is held by a nominee who is the owner of record, and the nominee credited or paid you dividends on the stock, show the name of the nominee and the dividends you received or for which you were credited. File 1040nr ez online   Enter on line 6 the total of the amounts listed on line 5. File 1040nr ez online Also enter this total on line 9a of Form 1040A or 1040. File 1040nr ez online Qualified dividends. File 1040nr ez online   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. File 1040nr ez online The amount in box 1b is already included in box 1a. File 1040nr ez online Do not add the amount in box 1b to, or substract it from, the amount in box 1a. File 1040nr ez online   Do not include any of the following on line 9b. File 1040nr ez online Qualified dividends you received as a nominee. File 1040nr ez online See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. File 1040nr ez online Dividends on stock for which you did not meet the holding period. File 1040nr ez online See Holding period , earlier under Qualified Dividends. File 1040nr ez online Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. File 1040nr ez online Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. File 1040nr ez online Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. File 1040nr ez online   If you have qualified dividends, you must figure your tax by completing the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 or 1040A instructions or the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions, whichever applies. File 1040nr ez online Enter qualified dividends on line 2 of the worksheet. File 1040nr ez online Investment interest deducted. File 1040nr ez online   If you claim a deduction for investment interest, you may have to reduce the amount of your qualified dividends that are eligible for the 0%, 15%, or 20% tax rate. File 1040nr ez online Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. File 1040nr ez online This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. File 1040nr ez online For more information about the limit on investment interest, see Investment expenses in chapter 23. File 1040nr ez online Expenses related to dividend income. File 1040nr ez online   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). File 1040nr ez online See chapter 28 for general information about deducting expenses of producing income. File 1040nr ez online More information. File 1040nr ez online    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. File 1040nr ez online Prev  Up  Next   Home   More Online Publications
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Update: Effect of Sequestration on Certain State & Local Government Filers of Form 8038-CP

Pursuant to the requirements of the Balanced Budget and Emergency Deficit Control Act of 1985, as amended, refund payments to certain state and local government filers claiming refundable credits under section 6431 of the Internal Revenue Code applicable to certain qualified bonds are subject to sequestration. This means that refund payments processed on or after October 1, 2013 and on or before September 30, 2014 will be reduced by the fiscal year 2014 sequestration rate of 7.2 percent, irrespective of when the amounts claimed by an issuer on any Form 8038-CP was filed with the IRS. The sequestration reduction rate will be applied unless and until a law is enacted that cancels or otherwise impacts the sequester, at which time the sequestration reduction rate is subject to change.

These reductions apply to Build America Bonds, Qualified School Construction Bonds, Qualified Zone Academy Bonds, New Clean Renewable Energy Bonds, and Qualified Energy Conservation Bonds for which the issuer elected to receive a direct credit subsidy pursuant to section 6431.  Issuers should complete Form 8038-CP in the manner provided by the Form 8038-CP Instructions, and affected issuers will be notified through correspondence that a portion of their requested payment was subject to the sequester reduction.  Issuers should use this correspondence to identify the portion(s) of amounts requested that were subject to the sequester reduction.

Issuers with any questions about the status of refunds claimed on Form 8038-CP, including any sequester reduction, should contact IRS Customer Account Services at 1-877-829-5500.

Click here to see the FY2013 article.

Page Last Reviewed or Updated: 26-Mar-2014

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File 1040nr ez online Publication 51 - Additional Material Prev  Up  Next   Home   More Online Publications