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Turbo Tax Amendment

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Turbo Tax Amendment

Turbo tax amendment Publication 970 - Additional Material Table of Contents AppendicesAppendix A. Turbo tax amendment Illustrated Example of Education Credits Glossary Appendices The following appendices are provided to help you claim the education benefits that will give you the lowest tax. Turbo tax amendment Appendix A—An illustrated example of education credits, including a filled-in Form 8863 showing how to claim both the American opportunity credit and lifetime learning credit for 2013. Turbo tax amendment Appendix B—A chart summarizing some of the major differences between the education tax benefits discussed in this publication. Turbo tax amendment It is intended only as a guide. Turbo tax amendment Look in this publication for more complete information. Turbo tax amendment   Appendix A. Turbo tax amendment Illustrated Example of Education Credits Dave and Valerie Jones are married and on their 2013 joint tax return they claim exemptions for their two dependent children, Sean (age 21, social security number: 000-00-0001) and Carey (age 18, social security number: 000–00–0002). Turbo tax amendment Their modified adjusted gross income (MAGI) on Form 1040, line 38 is $110,000. Turbo tax amendment Because Dave and Valerie have unusually high itemized deductions, their taxable income is $10,000 and their tax before credits is $1,000. Turbo tax amendment Sean enrolled as a full-time graduate student in August 2013 at California State College. Turbo tax amendment He graduated with his bachelor's degree in 2012 and did not attend school from January 2013 through July 2013. Turbo tax amendment His parents claimed the Hope Scholarship Credit for Sean for 2008 and the American opportunity credit for Sean for 2010, 2011, and 2012. Turbo tax amendment Carey enrolled full time as a freshman at the same college in January 2013 to begin working on her bachelor's degree. Turbo tax amendment In 2013, Dave and Valerie paid $7,000 in tuition for Sean and $8,500 in tuition for Carey. Turbo tax amendment California State College issued two Forms 1098-T, one for Sean and one for Carey, and sent them to the Joneses' residence. Turbo tax amendment California State College reports amounts billed in 2013 instead of amounts paid during 2013. Turbo tax amendment In completing Form 8863, the Joneses use the amounts they paid. Turbo tax amendment Neither Sean nor Carey has been convicted of a felony for possession or distribution of a controlled substance before the end of 2013. Turbo tax amendment Dave and Valerie figure their education credits by completing Form 8863. Turbo tax amendment They begin Form 8863 on page 2 before completing Part I on page 1. Turbo tax amendment Because the Joneses have two eligible students, they will complete page 2 twice, once for their son, Sean, and once for their daughter, Carey. Turbo tax amendment The Joneses decide to complete Part III for Carey first, as shown later. Turbo tax amendment They carry over the amount of $2,500 entered on Part III, line 30, to Part I, line 1. Turbo tax amendment The Joneses complete a separate Part III for their son Sean. Turbo tax amendment They check the “Yes” box on line 23, determine that Sean is not eligible for the American opportunity credit, and go to line 31 as instructed. Turbo tax amendment They figure their line 31 adjusted qualified education expenses for Sean to be $7,000. Turbo tax amendment Once they have completed Part III for each student, they figure their credits. Turbo tax amendment The Joneses figure their refundable American opportunity credit of $1,000 by completing Form 8863, Part I, lines 1 through 8. Turbo tax amendment They enter the amount from line 8, $1,000, on line 66 of their Form 1040. Turbo tax amendment The Joneses enter $7,000 on Part II, line 10, of Form 8863 and figure their tentative lifetime learning credit for 2013 to be $1,400 (line 12). Turbo tax amendment They cannot claim the full amount because their MAGI of $110,000 is greater than $107,000. Turbo tax amendment They enter the reduced amount of $1,190 (figured on Part II, line 18) on the Credit Limit Worksheet, line 1. Turbo tax amendment The $1,190 is added to their nonrefundable American opportunity credit ($1,500 on line 2 of the Credit Limit Worksheet) for a total nonrefundable credit of $2,690. Turbo tax amendment The Joneses enter $1,000 on line 7 of the Credit Limit Worksheet, which is the smaller of their tax from line 46 of their Form 1040 (which is $1,000) or the $2,690 on line 3 of the Credit Limit Worksheet. Turbo tax amendment They enter $1,000 on line 19, Part II of Form 8863 and on line 49 of Form 1040. Turbo tax amendment This image is too large to be displayed in the current screen. Turbo tax amendment Please click the link to view the image. Turbo tax amendment Form 1098-T Adjusted Qualified Education Expenses Worksheet (Form 8863 instructions) 1. Turbo tax amendment Total qualified education expenses paid for or on behalf of the student in 2013 for the academic period 8,500 2. Turbo tax amendment Less adjustments:     a. Turbo tax amendment Tax-free educational assistance received in 2013 allocable to the academic period   0     b. Turbo tax amendment Tax-free educational assistance received in 2014 (and before you file your 2013 tax return) allocable to the academic period   0     c. Turbo tax amendment Refunds of qualified education expenses paid in 2013 if the refund is received in 2013 or in 2014 before you file your 2013 tax return   0   3. Turbo tax amendment Total adjustments (add lines 2a, 2b, and 2c) 0 4. Turbo tax amendment Adjusted qualified education expenses. Turbo tax amendment Subtract line 3 from line 1. Turbo tax amendment If zero or less, enter -0- 8,500 This image is too large to be displayed in the current screen. Turbo tax amendment Please click the link to view the image. Turbo tax amendment Form 1098-T Adjusted Qualified Education Expenses Worksheet (Form 8863 instructions) 1. Turbo tax amendment Total qualified education expenses paid for or on behalf of the student in 2013 for the academic period 7,000 2. Turbo tax amendment Less adjustments:     a. Turbo tax amendment Tax-free educational assistance received in 2013 allocable to the academic period   0     b. Turbo tax amendment Tax-free educational assistance received in 2014 (and before you file your 2013 tax return) allocable to the academic period   0     c. Turbo tax amendment Refunds of qualified education expenses paid in 2013 if the refund is received in 2013 or in 2014 before you file your 2013 tax return   0   3. Turbo tax amendment Total adjustments (add lines 2a, 2b, and 2c) 0 4. Turbo tax amendment Adjusted qualified education expenses. Turbo tax amendment Subtract line 3 from line 1. Turbo tax amendment If zero or less, enter -0- 7,000 Credit Limit Worksheet (Form 8863 instructions) Nonrefundable Credit Worksheet 1. Turbo tax amendment Enter the amount from Form 8863, line 18 1. Turbo tax amendment 1,190 2. Turbo tax amendment Enter the amount from Form 8863, line 9 2. Turbo tax amendment 1,500 3. Turbo tax amendment Add lines 1 and 2 3. Turbo tax amendment 2,690 4. Turbo tax amendment Enter the amount from: Form 1040, line 46; or Form 1040A, line 28 4. Turbo tax amendment 1,000 5. Turbo tax amendment Enter the amount from either: Form 1040, lines 47 and 48, and the amount from Schedule R included on Form 1040, line 53; or Form 1040A, lines 29 and 30 5. Turbo tax amendment 0 6. Turbo tax amendment Subtract line 5 from line 4 6. Turbo tax amendment 1,000 7. Turbo tax amendment   Enter the smaller of line 3 or line 6 here and on Form 8863, line 19 7. Turbo tax amendment 1,000 This image is too large to be displayed in the current screen. Turbo tax amendment Please click the link to view the image. Turbo tax amendment Form 8863 for Dave and Valerie Jones This image is too large to be displayed in the current screen. Turbo tax amendment Please click the link to view the image. Turbo tax amendment Carey Jones page 2 This image is too large to be displayed in the current screen. Turbo tax amendment Please click the link to view the image. Turbo tax amendment Filled-in Form 8863 Jones page 2 Appendix B. Turbo tax amendment Highlights of Education Tax Benefits for Tax Year 2013 This chart highlights some differences among the benefits discussed in this publication. Turbo tax amendment See the text for definitions and details. Turbo tax amendment Do not rely on this chart alone. Turbo tax amendment    Caution:You generally cannot claim more than one benefit for the same education expense. Turbo tax amendment   Scholarships,  Fellowships, Grants, and  Tuition  Reductions American Opportunity Credit Lifetime Learning Credit Student Loan Interest Deduction Tuition and Fees Deduction Coverdell ESA† Qualified Tuition Program (QTP)† Education Exception to Additional Tax on Early IRA Distributions† Education Savings Bond Program† Employer- Provided Educational Assistance† Business Deduction for Work-Related Education What is your  benefit? Amounts received may not be taxable   Credits can reduce the amount of tax you have to pay. Turbo tax amendment    40% of the credit may be refundable (limited to $1,000 per student). Turbo tax amendment Credits can reduce amount of tax you must pay Can deduct interest paid Can deduct expenses Earnings not  taxed Earnings not taxed No 10%  additional tax on early distribution Interest not taxed Employer benefits not taxed Can deduct expenses What is the annual limit? None $2,500 credit per student $2,000 credit per tax return     $2,500 deduction $4,000 deduction $2,000 contribution per beneficiary None Amount of qualified  education expenses Amount of qualified  education expenses $5,250 exclusion Amount of qualifying work-related education expenses What expenses  qualify besides  tuition and required enrollment fees? Course-related expenses such as fees, books, supplies, and equipment Course-related books, supplies, and equipment Amounts paid for required books, etc. Turbo tax amendment , that must be paid to the educational institution, etc. Turbo tax amendment , are required fees Books Supplies Equipment  Room & board  Transportation  Other necessary expenses  None Books Supplies Equipment  Expenses for special needs services  Payments to QTP  Higher education: Room & board if  at least half-time  student  Elem/sec (K–12) education: Tutoring Room & board Uniforms Transportation Computer  access Supplementary expenses Books Supplies Equipment  Room & board if  at least half-time student  Expenses for special needs services Books Supplies Equipment  Room & board if  at least half-time student  Expenses for special needs services Payments to Coverdell ESA  Payments to QTP Books Supplies Equipment Transportation  Travel  Other necessary expenses   Scholarships,  Fellowships, Grants, and  Tuition  Reductions American Opportunity Credit Lifetime Learning Credit Student Loan Interest Deduction Tuition and Fees Deduction Coverdell ESA† Qualified Tuition Program (QTP)† Education Exception to Additional Tax on Early IRA Distributions† Education Savings Bond Program† Employer- Provided Educational Assistance† Business Deduction for Work-Related Education What education qualifies? Undergraduate & graduate  K–12 Undergraduate & graduate Undergraduate & graduate  Courses to acquire or improve job skills    Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate  K–12 Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate Undergraduate & graduate Required by employer or law to keep present job, salary, status  Maintain or improve job skills What are some of the other  conditions that  apply? Must be in degree or vocational program  Payment of tuition and required fees must be allowed under the grant Can be claimed for only 4 tax years (which includes years Hope Scholarship Credit claimed)  Must be enrolled at least half-time in degree program  No felony drug conviction(s)  Must not have completed first 4 years of postsecondary education before end of preceding tax year. Turbo tax amendment   No other conditions Must have been at least half-time  student in degree program Cannot claim both deduction & education credit for same student in same year Assets must be distributed at age 30 unless special  needs beneficiary No other conditions No other conditions Applies only to qualified series  EE bonds issued after 1989 or series I bonds No other conditions Cannot be to  meet minimum educational requirements of present trade/business  Cannot qualify  you for new trade/business   In what income  range do benefits  phase out? No phaseout $80,000 – $90,000  $160,000 – $180,000 for joint returns $53,000 – $63,000  $107,000 – $127,000 for joint returns $60,000 – $75,000  $125,000 –  $155,000 for  joint returns  $60,000 – $80,000  $130,000 –  $160,000 for  joint returns  $95,000 – $110,000  $190,000 – $220,000 for  joint returns No phaseout No phaseout   No phaseout No phaseout † Any nontaxable distribution is limited to the amount that does not exceed qualified education expenses. Turbo tax amendment Glossary The education benefits included in this publication were enacted over many years, leading to a number of common terms being defined differently from one benefit to the next. Turbo tax amendment For example, an eligible educational institution means one thing when determining if earnings from a Coverdell education savings account are not taxable and something else when determining if a scholarship or fellowship is not taxable. Turbo tax amendment For each term listed below that has more than one definition, the definition for each education benefit is listed. Turbo tax amendment Academic period:   A semester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. Turbo tax amendment If an educational institution uses credit hours or clock hours and does not have academic terms, each payment period can be treated as an academic period. Turbo tax amendment Adjusted qualified education expenses (AQEE):    Qualified education expenses (defined later) reduced by any tax-free educational assistance, such as a tax-free scholarship or employer-provided educational assistance. Turbo tax amendment They must also be reduced by any qualified education expenses deducted elsewhere on your return, used to determine an education credit or other benefit, or used to determine a tax-free distribution. Turbo tax amendment For information on a specific benefit, see the appropriate chapter in this publication. Turbo tax amendment Candidate for a degree:   A student who meets either of the following requirements. Turbo tax amendment Attends a primary or secondary school or pursues a degree at a college or university, or Attends an accredited educational institution that is authorized to provide: A program that is acceptable for full credit toward a bachelor's or higher degree, or A program of training to prepare students for gainful employment in a recognized occupation. Turbo tax amendment Designated beneficiary:   The individual named in the document creating the account/plan who is to receive the benefit of the funds in the account/plan. Turbo tax amendment Eligible educational institution:    American opportunity credit. Turbo tax amendment Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. Turbo tax amendment It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Turbo tax amendment Coverdell education savings account (ESA). Turbo tax amendment Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. Turbo tax amendment It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Turbo tax amendment Also included is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law. Turbo tax amendment Education savings bond program. Turbo tax amendment Same as American opportunity credit in this category. Turbo tax amendment IRA, early distributions from. Turbo tax amendment Same as American opportunity credit in this category. Turbo tax amendment Lifetime learning credit. Turbo tax amendment Same as American opportunity credit in this category. Turbo tax amendment Qualified tuition program (QTP). Turbo tax amendment Same as American opportunity credit in this category. Turbo tax amendment Scholarships and fellowships. Turbo tax amendment An institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities. Turbo tax amendment Student loan, cancellation of. Turbo tax amendment Same as Scholarships and fellowships in this category. Turbo tax amendment Student loan interest deduction. Turbo tax amendment Any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the Department of Education. Turbo tax amendment It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. Turbo tax amendment Also included is an institution that conducts an internship or residency program leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training. Turbo tax amendment Tuition and fees deduction. Turbo tax amendment Same as American opportunity credit in this category. Turbo tax amendment Eligible student:    American opportunity credit. Turbo tax amendment A student who meets all of the following requirements for the tax year for which the credit is being determined. Turbo tax amendment Did not have expenses that were used to figure an American opportunity or Hope Scholarship Credit in any 4 earlier tax years. Turbo tax amendment Had not completed the first 4 years of postsecondary education (generally the freshman through senior years). Turbo tax amendment For at least one academic period beginning in the tax year, was enrolled at least half-time in a program leading to a degree, certificate, or other recognized educational credential at an eligible educational institution. Turbo tax amendment Was free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year. Turbo tax amendment Lifetime learning credit. Turbo tax amendment A student who is enrolled in one or more courses at an eligible educational institution. Turbo tax amendment Student loan interest deduction. Turbo tax amendment A student who was enrolled at least half-time in a program leading to a postsecondary degree, certificate, or other recognized educational credential at an eligible educational institution. Turbo tax amendment Tuition and fees deduction. Turbo tax amendment A student who is enrolled in one or more courses at an eligible educational institution. Turbo tax amendment Half-time student:   A student who is enrolled for at least half the full-time academic work load for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled. Turbo tax amendment Modified adjusted gross income (MAGI):    American opportunity credit. Turbo tax amendment Adjusted gross income (AGI) as figured on the federal income tax return, modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Turbo tax amendment Coverdell education savings account (ESA). Turbo tax amendment Same as American opportunity credit in this category. Turbo tax amendment Education savings bond program. Turbo tax amendment Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any savings bond interest exclusion and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, Exclusion of income by bona fide residents of Puerto Rico, Exclusion for adoption benefits received under an employer's adoption assistance program, Deduction for student loan interest, Deduction for tuition and fees, and Deduction for domestic production activities. Turbo tax amendment Lifetime learning credit. Turbo tax amendment Same as American opportunity credit in this category. Turbo tax amendment Student loan interest deduction. Turbo tax amendment Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any student loan interest deduction, tuition and fees deduction, or domestic production activities deduction, and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Turbo tax amendment Tuition and fees deduction. Turbo tax amendment Adjusted gross income (AGI) as figured on the federal income tax return without taking into account any tuition and fees deduction, or domestic production activities deduction, and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion, Foreign housing deduction, Exclusion of income by bona fide residents of American Samoa, and Exclusion of income by bona fide residents of Puerto Rico. Turbo tax amendment Phaseout:   The amount of credit or deduction allowed is reduced when modified adjusted gross income (MAGI) is greater than a specified amount of income. Turbo tax amendment Qualified education expenses:   See pertinent chapter for specific items. Turbo tax amendment    American opportunity credit. Turbo tax amendment Tuition and certain related expenses (including student activity fees) required for enrollment or attendance at an eligible educational institution. Turbo tax amendment Books, supplies, and equipment needed for a course of study are included even if not purchased from the educational institution. Turbo tax amendment Does not include expenses for room and board. Turbo tax amendment Does not include expenses for courses involving sports, games, or hobbies (including noncredit courses) that are not part of the student's postsecondary degree program. Turbo tax amendment Coverdell education savings account (ESA). Turbo tax amendment Expenses related to or required for enrollment or attendance of the designated beneficiary at an eligible elementary, secondary, or postsecondary school. Turbo tax amendment Many specialized expenses included for K–12. Turbo tax amendment Also includes expenses for special needs services and contribution to qualified tuition program (QTP). Turbo tax amendment Education savings bond program. Turbo tax amendment Tuition and fees required to enroll at or attend an eligible educational institution. Turbo tax amendment Also includes contributions to a qualified tuition program (QTP) or Coverdell education savings account (ESA). Turbo tax amendment Does not include expenses for room and board. Turbo tax amendment Does not include expenses for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. Turbo tax amendment IRA, early distributions from. Turbo tax amendment Tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution, plus certain limited costs of room and board for students who are enrolled at least half-time. Turbo tax amendment Also includes expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance. Turbo tax amendment Lifetime learning credit. Turbo tax amendment Tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Turbo tax amendment Student-activity fees and expenses for course-related books, supplies, and equipment are included only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Turbo tax amendment Does not include expenses for room and board. Turbo tax amendment Does not include expenses for courses involving sports, games, or hobbies (including noncredit courses) that are not part of the student's postsecondary degree program, unless taken by the student to acquire or improve job skills. Turbo tax amendment Qualified tuition program (QTP). Turbo tax amendment Tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution, plus certain limited costs of room and board for students who are enrolled at least half-time. Turbo tax amendment Includes expenses for special needs services and computer access. Turbo tax amendment Scholarships and fellowships. Turbo tax amendment Expenses for tuition and fees required to enroll at or attend an eligible educational institution, and course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. Turbo tax amendment Course-related items must be required of all students in the course of instruction. Turbo tax amendment Student loan interest deduction. Turbo tax amendment Total costs of attending an eligible educational institution, including graduate school (however, limitations may apply to the cost of room and board allowed). Turbo tax amendment Tuition and fees deduction. Turbo tax amendment Tuition and certain related expenses required for enrollment or attendance at an eligible educational institution. Turbo tax amendment Student-activity fees and expenses for course-related books, supplies, and equipment are included only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Turbo tax amendment Recapture:   To include as income on your current year's return an amount allowed as a deduction in a prior year. Turbo tax amendment To include as tax on your current year's return an amount allowed as a credit in a prior year. Turbo tax amendment Rollover:   A tax-free distribution to you of cash or other assets from a tax-favored plan that you contribute to another tax-favored plan. Turbo tax amendment Transfer:   A movement of funds in a tax-favored plan from one trustee directly to another, either at your request or at the trustee's request. Turbo tax amendment Prev  Up  Next   Home   More Online Publications
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The Turbo Tax Amendment

Turbo tax amendment 8. Turbo tax amendment   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. Turbo tax amendment Reporting tax withheld. Turbo tax amendment Nominees. Turbo tax amendment Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. Turbo tax amendment Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. Turbo tax amendment Alternative minimum tax treatment. Turbo tax amendment How To Report Dividend IncomeInvestment interest deducted. Turbo tax amendment Reminder Foreign-source income. Turbo tax amendment  If you are a U. Turbo tax amendment S. Turbo tax amendment 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. Turbo tax amendment S. Turbo tax amendment law. Turbo tax amendment 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. Turbo tax amendment 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. Turbo tax amendment This chapter also explains how to report dividend income on your tax return. Turbo tax amendment Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. Turbo tax amendment You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. Turbo tax amendment However, some amounts you receive that are called dividends are actually interest income. Turbo tax amendment (See Dividends that are actually interest under Taxable Interest in chapter 7. Turbo tax amendment ) Most distributions are paid in cash (or check). Turbo tax amendment However, distributions can consist of more stock, stock rights, other property, or services. Turbo tax amendment 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. Turbo tax amendment Tax on unearned income of certain children. Turbo tax amendment   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Turbo tax amendment If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. Turbo tax amendment If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Turbo tax amendment    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Turbo tax amendment Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. Turbo tax amendment   For more information about the tax on unearned income of children and the parents' election, see chapter 31. Turbo tax amendment Beneficiary of an estate or trust. Turbo tax amendment    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. Turbo tax amendment You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Turbo tax amendment , from the fiduciary. Turbo tax amendment Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Turbo tax amendment Social security number (SSN) or individual taxpayer identification number (ITIN). Turbo tax amendment    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. Turbo tax amendment This includes payers of dividends. Turbo tax amendment If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. Turbo tax amendment For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. Turbo tax amendment Backup withholding. Turbo tax amendment   Your dividend income is generally not subject to regular withholding. Turbo tax amendment However, it may be subject to backup withholding to ensure that income tax is collected on the income. Turbo tax amendment Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Turbo tax amendment   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. Turbo tax amendment For more information, see Backup Withholding in chapter 4. Turbo tax amendment Stock certificate in two or more names. Turbo tax amendment   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. Turbo tax amendment Form 1099-DIV. Turbo tax amendment   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. Turbo tax amendment Keep this form with your records. Turbo tax amendment You do not have to attach it to your tax return. Turbo tax amendment Dividends not reported on Form 1099-DIV. Turbo tax amendment   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. Turbo tax amendment For example, you may receive distributive shares of dividends from partnerships or S corporations. Turbo tax amendment These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Turbo tax amendment , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Turbo tax amendment Reporting tax withheld. Turbo tax amendment   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. Turbo tax amendment Nominees. Turbo tax amendment   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. Turbo tax amendment Form 1099-MISC. Turbo tax amendment   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. Turbo tax amendment See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. Turbo tax amendment Incorrect amount shown on a Form 1099. Turbo tax amendment   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Turbo tax amendment The new Form 1099 you receive will be marked “Corrected. Turbo tax amendment ” Dividends on stock sold. Turbo tax amendment   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. Turbo tax amendment Dividends received in January. Turbo tax amendment   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. Turbo tax amendment You report the dividend in the year it was declared. Turbo tax amendment Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. Turbo tax amendment They are paid out of earnings and profits and are ordinary income to you. Turbo tax amendment This means they are not capital gains. Turbo tax amendment 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. Turbo tax amendment Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. Turbo tax amendment 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. Turbo tax amendment They should be shown in box 1b of the Form 1099-DIV you receive. Turbo tax amendment The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. Turbo tax amendment 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. Turbo tax amendment 6%. Turbo tax amendment 20% on any amount that otherwise would be taxed at a 39. Turbo tax amendment 6% rate. Turbo tax amendment To qualify for the maximum rate, all of the following requirements must be met. Turbo tax amendment The dividends must have been paid by a U. Turbo tax amendment S. Turbo tax amendment corporation or a qualified foreign corporation. Turbo tax amendment (See Qualified foreign corporation , later. Turbo tax amendment ) The dividends are not of the type listed later under Dividends that are not qualified dividends . Turbo tax amendment You meet the holding period (discussed next). Turbo tax amendment Holding period. Turbo tax amendment   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. Turbo tax amendment 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. Turbo tax amendment Instead, the seller will get the dividend. Turbo tax amendment   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. Turbo tax amendment See the examples later. Turbo tax amendment Exception for preferred stock. Turbo tax amendment   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. Turbo tax amendment If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. Turbo tax amendment Example 1. Turbo tax amendment You bought 5,000 shares of XYZ Corp. Turbo tax amendment common stock on July 9, 2013. Turbo tax amendment XYZ Corp. Turbo tax amendment paid a cash dividend of 10 cents per share. Turbo tax amendment The ex-dividend date was July 16, 2013. Turbo tax amendment Your Form 1099-DIV from XYZ Corp. Turbo tax amendment shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). Turbo tax amendment However, you sold the 5,000 shares on August 12, 2013. Turbo tax amendment You held your shares of XYZ Corp. Turbo tax amendment for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). Turbo tax amendment The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. Turbo tax amendment You have no qualified dividends from XYZ Corp. Turbo tax amendment because you held the XYZ stock for less than 61 days. Turbo tax amendment Example 2. Turbo tax amendment 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. Turbo tax amendment You held the stock for 63 days (from July 16, 2013, through September 16, 2013). Turbo tax amendment 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). Turbo tax amendment Example 3. Turbo tax amendment You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. Turbo tax amendment ABC Mutual Fund paid a cash dividend of 10 cents a share. Turbo tax amendment The ex-dividend date was July 16, 2013. Turbo tax amendment The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. Turbo tax amendment Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. Turbo tax amendment However, you sold the 10,000 shares on August 12, 2013. Turbo tax amendment You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. Turbo tax amendment Holding period reduced where risk of loss is diminished. Turbo tax amendment   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. Turbo tax amendment 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. Turbo tax amendment You were grantor (writer) of an option to buy substantially identical stock or securities. Turbo tax amendment Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. Turbo tax amendment   For information about how to apply condition (3), see Regulations section 1. Turbo tax amendment 246-5. Turbo tax amendment Qualified foreign corporation. Turbo tax amendment   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. Turbo tax amendment The corporation is incorporated in a U. Turbo tax amendment S. Turbo tax amendment possession. Turbo tax amendment 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. Turbo tax amendment For a list of those treaties, see Table 8-1. Turbo tax amendment 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. Turbo tax amendment See Readily tradable stock , later. Turbo tax amendment Exception. Turbo tax amendment   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. Turbo tax amendment Readily tradable stock. Turbo tax amendment   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. Turbo tax amendment For a list of the exchanges that meet these requirements, see www. Turbo tax amendment sec. Turbo tax amendment gov/divisions/marketreg/mrexchanges. Turbo tax amendment shtml. Turbo tax amendment Dividends that are not qualified dividends. Turbo tax amendment   The following dividends are not qualified dividends. Turbo tax amendment They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. Turbo tax amendment Capital gain distributions. Turbo tax amendment Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. Turbo tax amendment S. Turbo tax amendment building and loan associations, U. Turbo tax amendment S. Turbo tax amendment savings and loan associations, federal savings and loan associations, and similar financial institutions. Turbo tax amendment (Report these amounts as interest income. Turbo tax amendment ) 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. Turbo tax amendment 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. Turbo tax amendment 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. Turbo tax amendment Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Turbo tax amendment 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. Turbo tax amendment Table 8-1. Turbo tax amendment Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. Turbo tax amendment 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. Turbo tax amendment 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. Turbo tax amendment Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. Turbo tax amendment 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. Turbo tax amendment 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. Turbo tax amendment 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. Turbo tax amendment But you may be able to deduct the service charge. Turbo tax amendment See chapter 28 for more information about deducting expenses of producing income. Turbo tax amendment In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. Turbo tax amendment 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. Turbo tax amendment When figuring this amount, use the fair market value of the stock on the dividend payment date. Turbo tax amendment Money Market Funds Report amounts you receive from money market funds as dividend income. Turbo tax amendment Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. Turbo tax amendment 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). Turbo tax amendment They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. Turbo tax amendment Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. Turbo tax amendment Undistributed capital gains of mutual funds and REITs. Turbo tax amendment    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. Turbo tax amendment You must treat your share of these gains as distributions, even though you did not actually receive them. Turbo tax amendment However, they are not included on Form 1099-DIV. Turbo tax amendment Instead, they are reported to you in box 1a of Form 2439. Turbo tax amendment   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. Turbo tax amendment   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. Turbo tax amendment You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. Turbo tax amendment Attach Copy B of Form 2439 to your return, and keep Copy C for your records. Turbo tax amendment Basis adjustment. Turbo tax amendment   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. Turbo tax amendment Additional information. Turbo tax amendment   For more information on the treatment of distributions from mutual funds, see Publication 550. Turbo tax amendment 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. Turbo tax amendment You should receive a Form 1099-DIV or other statement showing the nondividend distribution. Turbo tax amendment On Form 1099-DIV, a nondividend distribution will be shown in box 3. Turbo tax amendment If you do not receive such a statement, you report the distribution as an ordinary dividend. Turbo tax amendment Basis adjustment. Turbo tax amendment   A nondividend distribution reduces the basis of your stock. Turbo tax amendment It is not taxed until your basis in the stock is fully recovered. Turbo tax amendment This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. Turbo tax amendment 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. Turbo tax amendment   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. Turbo tax amendment Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. Turbo tax amendment See Holding Period in chapter 14. Turbo tax amendment Example. Turbo tax amendment You bought stock in 2000 for $100. Turbo tax amendment In 2003, you received a nondividend distribution of $80. Turbo tax amendment You did not include this amount in your income, but you reduced the basis of your stock to $20. Turbo tax amendment You received a nondividend distribution of $30 in 2013. Turbo tax amendment The first $20 of this amount reduced your basis to zero. Turbo tax amendment You report the other $10 as a long-term capital gain for 2013. Turbo tax amendment You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. Turbo tax amendment Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. Turbo tax amendment These distributions are, at least in part, one form of a return of capital. Turbo tax amendment They may be paid in one or more installments. Turbo tax amendment You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. Turbo tax amendment For more information on liquidating distributions, see chapter 1 of Publication 550. Turbo tax amendment Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. Turbo tax amendment Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. Turbo tax amendment Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. Turbo tax amendment Taxable stock dividends and stock rights. Turbo tax amendment   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. Turbo tax amendment You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. Turbo tax amendment 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. Turbo tax amendment The distribution is in convertible preferred stock and has the same result as in (2). Turbo tax amendment The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. Turbo tax amendment The distribution is on preferred stock. Turbo tax amendment (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. Turbo tax amendment )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. Turbo tax amendment If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. Turbo tax amendment Preferred stock redeemable at a premium. Turbo tax amendment   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. Turbo tax amendment For more information, see chapter 1 of Publication 550. Turbo tax amendment Basis. Turbo tax amendment   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. Turbo tax amendment 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. Turbo tax amendment Fractional shares. Turbo tax amendment    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. Turbo tax amendment 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. Turbo tax amendment Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. Turbo tax amendment Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. Turbo tax amendment 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. Turbo tax amendment    Report these transactions on Form 8949 with the correct box checked. Turbo tax amendment   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. Turbo tax amendment Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). Turbo tax amendment Example. Turbo tax amendment You own one share of common stock that you bought on January 3, 2004, for $100. Turbo tax amendment The corporation declared a common stock dividend of 5% on June 29, 2013. Turbo tax amendment The fair market value of the stock at the time the stock dividend was declared was $200. Turbo tax amendment You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. Turbo tax amendment You figure your gain or loss as follows: Fair market value of old stock $200. Turbo tax amendment 00 Fair market value of stock dividend (cash received) +10. Turbo tax amendment 00 Fair market value of old stock and stock dividend $210. Turbo tax amendment 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. Turbo tax amendment 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. Turbo tax amendment 76 Total $100. Turbo tax amendment 00 Cash received $10. Turbo tax amendment 00 Basis (cost) of stock dividend − 4. Turbo tax amendment 76 Gain $5. Turbo tax amendment 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. Turbo tax amendment Scrip dividends. Turbo tax amendment   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. Turbo tax amendment The certificate is generally nontaxable when you receive it. Turbo tax amendment 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. Turbo tax amendment   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. Turbo tax amendment You must include its fair market value in income on the date you receive it. Turbo tax amendment Other Distributions You may receive any of the following distributions during the year. Turbo tax amendment Exempt-interest dividends. Turbo tax amendment   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. Turbo tax amendment Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Turbo tax amendment Information reporting requirement. Turbo tax amendment   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. Turbo tax amendment This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. Turbo tax amendment Alternative minimum tax treatment. Turbo tax amendment   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Turbo tax amendment See Alternative Minimum Tax (AMT) in chapter 30 for more information. Turbo tax amendment Dividends on insurance policies. Turbo tax amendment    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. Turbo tax amendment However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. Turbo tax amendment    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. Turbo tax amendment Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. Turbo tax amendment Report any taxable distributions on insurance policies on Form 1040, line 21. Turbo tax amendment Dividends on veterans' insurance. Turbo tax amendment   Dividends you receive on veterans' insurance policies are not taxable. Turbo tax amendment In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. Turbo tax amendment Patronage dividends. Turbo tax amendment   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. Turbo tax amendment   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. Turbo tax amendment But you must reduce the basis (cost) of the items bought. Turbo tax amendment If the dividend is more than the adjusted basis of the assets, you must report the excess as income. Turbo tax amendment   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. Turbo tax amendment Alaska Permanent Fund dividends. Turbo tax amendment    Do not report these amounts as dividends. Turbo tax amendment Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. Turbo tax amendment How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. Turbo tax amendment Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. Turbo tax amendment Report qualified dividends on line 9b of Form 1040 or Form 1040A. Turbo tax amendment If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. Turbo tax amendment See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. Turbo tax amendment If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. Turbo tax amendment You cannot use Form 1040EZ if you receive any dividend income. Turbo tax amendment Form 1099-DIV. Turbo tax amendment   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. Turbo tax amendment Even if you do not receive Form 1099-DIV, you must report all your dividend income. Turbo tax amendment   See Form 1099-DIV for more information on how to report dividend income. Turbo tax amendment Form 1040A or 1040. Turbo tax amendment    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. Turbo tax amendment If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. Turbo tax amendment   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. Turbo tax amendment 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. Turbo tax amendment 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. Turbo tax amendment   Enter on line 6 the total of the amounts listed on line 5. Turbo tax amendment Also enter this total on line 9a of Form 1040A or 1040. Turbo tax amendment Qualified dividends. Turbo tax amendment   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. Turbo tax amendment The amount in box 1b is already included in box 1a. Turbo tax amendment Do not add the amount in box 1b to, or substract it from, the amount in box 1a. Turbo tax amendment   Do not include any of the following on line 9b. Turbo tax amendment Qualified dividends you received as a nominee. Turbo tax amendment See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. Turbo tax amendment Dividends on stock for which you did not meet the holding period. Turbo tax amendment See Holding period , earlier under Qualified Dividends. Turbo tax amendment 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. Turbo tax amendment Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Turbo tax amendment 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. Turbo tax amendment   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. Turbo tax amendment Enter qualified dividends on line 2 of the worksheet. Turbo tax amendment Investment interest deducted. Turbo tax amendment   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. Turbo tax amendment Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. Turbo tax amendment This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. Turbo tax amendment For more information about the limit on investment interest, see Investment expenses in chapter 23. Turbo tax amendment Expenses related to dividend income. Turbo tax amendment   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). Turbo tax amendment See chapter 28 for general information about deducting expenses of producing income. Turbo tax amendment More information. Turbo tax amendment    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. Turbo tax amendment Prev  Up  Next   Home   More Online Publications