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Www myfreetaxes com unitedwayhoco org 4. Www myfreetaxes com unitedwayhoco org   Retirement Savings Contributions Credit (Saver's Credit) Table of Contents What's New Introduction Full-time student. Www myfreetaxes com unitedwayhoco org Adjusted gross income. Www myfreetaxes com unitedwayhoco org Distributions received by spouse. Www myfreetaxes com unitedwayhoco org Testing period. Www myfreetaxes com unitedwayhoco org What's New Modified AGI limit for retirement savings contributions credit increased. Www myfreetaxes com unitedwayhoco org  For 2013, you may be able to claim the retirement savings contributions credit if your modified AGI is not more than: $59,000 if your filing status is married filing jointly, $44,250 if your filing status is head of household, or $29,500 if your filing status is single, married filing separately, or qualifying widow(er). Www myfreetaxes com unitedwayhoco org Introduction You may be able to take a tax credit if you make eligible contributions (defined later) to a qualified retirement plan, an eligible deferred compensation plan, or an individual retirement arrangement (IRA). Www myfreetaxes com unitedwayhoco org You may be able to take a credit of up to $1,000 (up to $2,000 if filing jointly). Www myfreetaxes com unitedwayhoco org This credit could reduce the federal income tax you pay dollar for dollar. Www myfreetaxes com unitedwayhoco org    Can you claim the credit?   If you make eligible contributions to a qualified retirement plan, an eligible deferred compensation plan, or an IRA, you can claim the credit if all of the following apply. Www myfreetaxes com unitedwayhoco org You were born before January 2, 1996. Www myfreetaxes com unitedwayhoco org You are not a full-time student (explained next). Www myfreetaxes com unitedwayhoco org No one else, such as your parent(s), claims an exemption for you on their tax return. Www myfreetaxes com unitedwayhoco org Your adjusted gross income (defined below) is not more than: $59,000 if your filing status is married filing jointly, $44,250 if your filing status is head of household, or $29,500 if your filing status is single, married filing separately, or qualifying widow(er). Www myfreetaxes com unitedwayhoco org Full-time student. Www myfreetaxes com unitedwayhoco org   You are a full-time student if, during some part of each of 5 calendar months (not necessarily consecutive) during the calendar year, you are either: A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or A student taking a full-time, on-farm training course given by either a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or a state, county, or local government. Www myfreetaxes com unitedwayhoco org You are a full-time student if you are enrolled for the number of hours or courses the school considers to be full time. Www myfreetaxes com unitedwayhoco org Adjusted gross income. Www myfreetaxes com unitedwayhoco org   This is generally the amount on line 38 of your 2013 Form 1040; line 22 of your 2013 Form 1040A; or line 37 of your 2013 Form 1040NR. Www myfreetaxes com unitedwayhoco org However, you must add to that amount any exclusion or deduction claimed for the year for: Foreign earned income, Foreign housing costs, Income for bona fide residents of American Samoa, and Income from Puerto Rico. Www myfreetaxes com unitedwayhoco org Eligible contributions. Www myfreetaxes com unitedwayhoco org   These include: Contributions to a traditional or Roth IRA, Salary reduction contributions (elective deferrals, including amounts designated as after-tax Roth contributions) to: A 401(k) plan (including a SIMPLE 401(k)), A section 403(b) annuity, An eligible deferred compensation plan of a state or local government (a governmental 457 plan), A SIMPLE IRA plan, or A salary reduction SEP, and Contributions to a section 501(c)(18) plan. Www myfreetaxes com unitedwayhoco org They also include voluntary after-tax employee contributions to a tax-qualified retirement plan or section 403(b) annuity. Www myfreetaxes com unitedwayhoco org For purposes of the credit, an employee contribution will be voluntary as long as it is not required as a condition of employment. Www myfreetaxes com unitedwayhoco org Reducing eligible contributions. Www myfreetaxes com unitedwayhoco org   Reduce your eligible contributions (but not below zero) by the total distributions you received during the testing period (defined later) from any IRA, plan, or annuity included above under Eligible contributions. Www myfreetaxes com unitedwayhoco org Also reduce your eligible contributions by any distribution from a Roth IRA that is not rolled over, even if the distribution is not taxable. Www myfreetaxes com unitedwayhoco org   Do not reduce your eligible contributions by any of the following. Www myfreetaxes com unitedwayhoco org The portion of any distribution which is not includible in income because it is a trustee-to-trustee transfer or a rollover distribution. Www myfreetaxes com unitedwayhoco org Distributions that are taxable as the result of an in-plan rollover to your designated Roth account. Www myfreetaxes com unitedwayhoco org Any distribution that is a return of a contribution to an IRA (including a Roth IRA) made during the year for which you claim the credit if: The distribution is made before the due date (including extensions) of your tax return for that year, You do not take a deduction for the contribution, and The distribution includes any income attributable to the contribution. Www myfreetaxes com unitedwayhoco org Loans from a qualified employer plan treated as a distribution. Www myfreetaxes com unitedwayhoco org Distributions of excess contributions or deferrals (and income attributable to excess contributions and deferrals). Www myfreetaxes com unitedwayhoco org Distributions of dividends paid on stock held by an employee stock ownership plan under section 404(k). Www myfreetaxes com unitedwayhoco org Distributions from an eligible retirement plan that are converted or rolled over to a Roth IRA. Www myfreetaxes com unitedwayhoco org Distributions from a military retirement plan. Www myfreetaxes com unitedwayhoco org Distributions from an inherited IRA by a nonspousal beneficiary. Www myfreetaxes com unitedwayhoco org Distributions received by spouse. Www myfreetaxes com unitedwayhoco org   Any distributions your spouse receives are treated as received by you if you file a joint return with your spouse both for the year of the distribution and for the year for which you claim the credit. Www myfreetaxes com unitedwayhoco org Testing period. Www myfreetaxes com unitedwayhoco org   The testing period consists of the year for which you claim the credit, the period after the end of that year and before the due date (including extensions) for filing your return for that year, and the 2 tax years before that year. Www myfreetaxes com unitedwayhoco org Example. Www myfreetaxes com unitedwayhoco org You and your spouse filed joint returns in 2011 and 2012, and plan to do so in 2013 and 2014. Www myfreetaxes com unitedwayhoco org You received a taxable distribution from a qualified plan in 2011 and a taxable distribution from an eligible deferred compensation plan in 2012. Www myfreetaxes com unitedwayhoco org Your spouse received taxable distributions from a Roth IRA in 2013 and tax-free distributions from a Roth IRA in 2014 before April 15. Www myfreetaxes com unitedwayhoco org You made eligible contributions to an IRA in 2013 and you otherwise qualify for this credit. Www myfreetaxes com unitedwayhoco org You must reduce the amount of your qualifying contributions in 2013 by the total of the distributions you received in 2011, 2012, 2013, and 2014. Www myfreetaxes com unitedwayhoco org Maximum eligible contributions. Www myfreetaxes com unitedwayhoco org   After your contributions are reduced, the maximum annual contribution on which you can base the credit is $2,000 per person. Www myfreetaxes com unitedwayhoco org Effect on other credits. Www myfreetaxes com unitedwayhoco org   The amount of this credit will not change the amount of your refundable tax credits. Www myfreetaxes com unitedwayhoco org A refundable tax credit, such as the earned income credit or the refundable amount of your child tax credit, is an amount that you would receive as a refund even if you did not otherwise owe any taxes. Www myfreetaxes com unitedwayhoco org Maximum credit. Www myfreetaxes com unitedwayhoco org   This is a nonrefundable credit. Www myfreetaxes com unitedwayhoco org The amount of the credit in any year cannot be more than the amount of tax that you would otherwise pay (not counting any refundable credits) in any year. Www myfreetaxes com unitedwayhoco org If your tax liability is reduced to zero because of other nonrefundable credits, such as the credit for child and dependent care expenses, then you will not be entitled to this credit. Www myfreetaxes com unitedwayhoco org How to figure and report the credit. Www myfreetaxes com unitedwayhoco org   The amount of the credit you can get is based on the contributions you make and your credit rate. Www myfreetaxes com unitedwayhoco org Your credit rate can be as low as 10% or as high as 50%. Www myfreetaxes com unitedwayhoco org Your credit rate depends on your income and your filing status. Www myfreetaxes com unitedwayhoco org See Form 8880 to determine your credit rate. Www myfreetaxes com unitedwayhoco org   The maximum contribution taken into account is $2,000 per person. Www myfreetaxes com unitedwayhoco org On a joint return, up to $2,000 is taken into account for each spouse. Www myfreetaxes com unitedwayhoco org   Figure the credit on Form 8880. Www myfreetaxes com unitedwayhoco org Report the credit on line 50 of your Form 1040; line 32 of your Form 1040A; or line 47 of your Form 1040NR and attach Form 8880 to your return. Www myfreetaxes com unitedwayhoco org Prev  Up  Next   Home   More Online Publications
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City  Street Address  Days/Hours of Service  Telephone* 
Washington, DC  77 K Street NE
Washington, DC 20002 

Monday-Friday 8:30 a.m.-4:30 p.m.

 

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(202) 803-9000

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.

The Taxpayer Advocate Service: Call  (202) 803-9800 or 1-877-777-4778 or see  Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see  Tax Topic 104.

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IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
Metro Plex 1
8401 Corporate Drive, Suite 300
Landover, MD  20785

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

Page Last Reviewed or Updated: 28-Mar-2014

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