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Ammending A Tax Return

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Ammending A Tax Return

Ammending a tax return 8. Ammending a tax return   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. Ammending a tax return Reporting tax withheld. Ammending a tax return Nominees. Ammending a tax return Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. Ammending a tax return Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. Ammending a tax return Alternative minimum tax treatment. Ammending a tax return How To Report Dividend IncomeInvestment interest deducted. Ammending a tax return Reminder Foreign-source income. Ammending a tax return  If you are a U. Ammending a tax return S. Ammending a tax return 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. Ammending a tax return S. Ammending a tax return law. Ammending a tax return 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. Ammending a tax return 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. Ammending a tax return This chapter also explains how to report dividend income on your tax return. Ammending a tax return Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. Ammending a tax return You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. Ammending a tax return However, some amounts you receive that are called dividends are actually interest income. Ammending a tax return (See Dividends that are actually interest under Taxable Interest in chapter 7. Ammending a tax return ) Most distributions are paid in cash (or check). Ammending a tax return However, distributions can consist of more stock, stock rights, other property, or services. Ammending a tax return 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. Ammending a tax return Tax on unearned income of certain children. Ammending a tax return   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Ammending a tax return If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. Ammending a tax return If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Ammending a tax return    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Ammending a tax return Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. Ammending a tax return   For more information about the tax on unearned income of children and the parents' election, see chapter 31. Ammending a tax return Beneficiary of an estate or trust. Ammending a tax return    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. Ammending a tax return You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Ammending a tax return , from the fiduciary. Ammending a tax return Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Ammending a tax return Social security number (SSN) or individual taxpayer identification number (ITIN). Ammending a tax return    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. Ammending a tax return This includes payers of dividends. Ammending a tax return If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. Ammending a tax return For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. Ammending a tax return Backup withholding. Ammending a tax return   Your dividend income is generally not subject to regular withholding. Ammending a tax return However, it may be subject to backup withholding to ensure that income tax is collected on the income. Ammending a tax return Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Ammending a tax return   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. Ammending a tax return For more information, see Backup Withholding in chapter 4. Ammending a tax return Stock certificate in two or more names. Ammending a tax return   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. Ammending a tax return Form 1099-DIV. Ammending a tax return   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. Ammending a tax return Keep this form with your records. Ammending a tax return You do not have to attach it to your tax return. Ammending a tax return Dividends not reported on Form 1099-DIV. Ammending a tax return   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. Ammending a tax return For example, you may receive distributive shares of dividends from partnerships or S corporations. Ammending a tax return These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Ammending a tax return , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Ammending a tax return Reporting tax withheld. Ammending a tax return   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. Ammending a tax return Nominees. Ammending a tax return   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. Ammending a tax return Form 1099-MISC. Ammending a tax return   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. Ammending a tax return See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. Ammending a tax return Incorrect amount shown on a Form 1099. Ammending a tax return   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Ammending a tax return The new Form 1099 you receive will be marked “Corrected. Ammending a tax return ” Dividends on stock sold. Ammending a tax return   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. Ammending a tax return Dividends received in January. Ammending a tax return   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. Ammending a tax return You report the dividend in the year it was declared. Ammending a tax return Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. Ammending a tax return They are paid out of earnings and profits and are ordinary income to you. Ammending a tax return This means they are not capital gains. Ammending a tax return 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. Ammending a tax return Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. Ammending a tax return 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. Ammending a tax return They should be shown in box 1b of the Form 1099-DIV you receive. Ammending a tax return The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. Ammending a tax return 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. Ammending a tax return 6%. Ammending a tax return 20% on any amount that otherwise would be taxed at a 39. Ammending a tax return 6% rate. Ammending a tax return To qualify for the maximum rate, all of the following requirements must be met. Ammending a tax return The dividends must have been paid by a U. Ammending a tax return S. Ammending a tax return corporation or a qualified foreign corporation. Ammending a tax return (See Qualified foreign corporation , later. Ammending a tax return ) The dividends are not of the type listed later under Dividends that are not qualified dividends . Ammending a tax return You meet the holding period (discussed next). Ammending a tax return Holding period. Ammending a tax return   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. Ammending a tax return 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. Ammending a tax return Instead, the seller will get the dividend. Ammending a tax return   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. Ammending a tax return See the examples later. Ammending a tax return Exception for preferred stock. Ammending a tax return   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. Ammending a tax return If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. Ammending a tax return Example 1. Ammending a tax return You bought 5,000 shares of XYZ Corp. Ammending a tax return common stock on July 9, 2013. Ammending a tax return XYZ Corp. Ammending a tax return paid a cash dividend of 10 cents per share. Ammending a tax return The ex-dividend date was July 16, 2013. Ammending a tax return Your Form 1099-DIV from XYZ Corp. Ammending a tax return shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). Ammending a tax return However, you sold the 5,000 shares on August 12, 2013. Ammending a tax return You held your shares of XYZ Corp. Ammending a tax return for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). Ammending a tax return The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. Ammending a tax return You have no qualified dividends from XYZ Corp. Ammending a tax return because you held the XYZ stock for less than 61 days. Ammending a tax return Example 2. Ammending a tax return 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. Ammending a tax return You held the stock for 63 days (from July 16, 2013, through September 16, 2013). Ammending a tax return 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). Ammending a tax return Example 3. Ammending a tax return You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. Ammending a tax return ABC Mutual Fund paid a cash dividend of 10 cents a share. Ammending a tax return The ex-dividend date was July 16, 2013. Ammending a tax return The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. Ammending a tax return Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. Ammending a tax return However, you sold the 10,000 shares on August 12, 2013. Ammending a tax return You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. Ammending a tax return Holding period reduced where risk of loss is diminished. Ammending a tax return   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. Ammending a tax return 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. Ammending a tax return You were grantor (writer) of an option to buy substantially identical stock or securities. Ammending a tax return Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. Ammending a tax return   For information about how to apply condition (3), see Regulations section 1. Ammending a tax return 246-5. Ammending a tax return Qualified foreign corporation. Ammending a tax return   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. Ammending a tax return The corporation is incorporated in a U. Ammending a tax return S. Ammending a tax return possession. Ammending a tax return 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. Ammending a tax return For a list of those treaties, see Table 8-1. Ammending a tax return 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. Ammending a tax return See Readily tradable stock , later. Ammending a tax return Exception. Ammending a tax return   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. Ammending a tax return Readily tradable stock. Ammending a tax return   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. Ammending a tax return For a list of the exchanges that meet these requirements, see www. Ammending a tax return sec. Ammending a tax return gov/divisions/marketreg/mrexchanges. Ammending a tax return shtml. Ammending a tax return Dividends that are not qualified dividends. Ammending a tax return   The following dividends are not qualified dividends. Ammending a tax return They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. Ammending a tax return Capital gain distributions. Ammending a tax return Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. Ammending a tax return S. Ammending a tax return building and loan associations, U. Ammending a tax return S. Ammending a tax return savings and loan associations, federal savings and loan associations, and similar financial institutions. Ammending a tax return (Report these amounts as interest income. Ammending a tax return ) 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. Ammending a tax return 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. Ammending a tax return 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. Ammending a tax return Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Ammending a tax return 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. Ammending a tax return Table 8-1. Ammending a tax return Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. Ammending a tax return 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. Ammending a tax return 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. Ammending a tax return Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. Ammending a tax return 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. Ammending a tax return 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. Ammending a tax return 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. Ammending a tax return But you may be able to deduct the service charge. Ammending a tax return See chapter 28 for more information about deducting expenses of producing income. Ammending a tax return In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. Ammending a tax return 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. Ammending a tax return When figuring this amount, use the fair market value of the stock on the dividend payment date. Ammending a tax return Money Market Funds Report amounts you receive from money market funds as dividend income. Ammending a tax return Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. Ammending a tax return 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). Ammending a tax return They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. Ammending a tax return Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. Ammending a tax return Undistributed capital gains of mutual funds and REITs. Ammending a tax return    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. Ammending a tax return You must treat your share of these gains as distributions, even though you did not actually receive them. Ammending a tax return However, they are not included on Form 1099-DIV. Ammending a tax return Instead, they are reported to you in box 1a of Form 2439. Ammending a tax return   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. Ammending a tax return   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. Ammending a tax return You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. Ammending a tax return Attach Copy B of Form 2439 to your return, and keep Copy C for your records. Ammending a tax return Basis adjustment. Ammending a tax return   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. Ammending a tax return Additional information. Ammending a tax return   For more information on the treatment of distributions from mutual funds, see Publication 550. Ammending a tax return 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. Ammending a tax return You should receive a Form 1099-DIV or other statement showing the nondividend distribution. Ammending a tax return On Form 1099-DIV, a nondividend distribution will be shown in box 3. Ammending a tax return If you do not receive such a statement, you report the distribution as an ordinary dividend. Ammending a tax return Basis adjustment. Ammending a tax return   A nondividend distribution reduces the basis of your stock. Ammending a tax return It is not taxed until your basis in the stock is fully recovered. Ammending a tax return This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. Ammending a tax return 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. Ammending a tax return   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. Ammending a tax return Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. Ammending a tax return See Holding Period in chapter 14. Ammending a tax return Example. Ammending a tax return You bought stock in 2000 for $100. Ammending a tax return In 2003, you received a nondividend distribution of $80. Ammending a tax return You did not include this amount in your income, but you reduced the basis of your stock to $20. Ammending a tax return You received a nondividend distribution of $30 in 2013. Ammending a tax return The first $20 of this amount reduced your basis to zero. Ammending a tax return You report the other $10 as a long-term capital gain for 2013. Ammending a tax return You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. Ammending a tax return Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. Ammending a tax return These distributions are, at least in part, one form of a return of capital. Ammending a tax return They may be paid in one or more installments. Ammending a tax return You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. Ammending a tax return For more information on liquidating distributions, see chapter 1 of Publication 550. Ammending a tax return Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. Ammending a tax return Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. Ammending a tax return Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. Ammending a tax return Taxable stock dividends and stock rights. Ammending a tax return   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. Ammending a tax return You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. Ammending a tax return 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. Ammending a tax return The distribution is in convertible preferred stock and has the same result as in (2). Ammending a tax return The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. Ammending a tax return The distribution is on preferred stock. Ammending a tax return (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. Ammending a tax return )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. Ammending a tax return If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. Ammending a tax return Preferred stock redeemable at a premium. Ammending a tax return   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. Ammending a tax return For more information, see chapter 1 of Publication 550. Ammending a tax return Basis. Ammending a tax return   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. Ammending a tax return 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. Ammending a tax return Fractional shares. Ammending a tax return    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. Ammending a tax return 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. Ammending a tax return Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. Ammending a tax return Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. Ammending a tax return 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. Ammending a tax return    Report these transactions on Form 8949 with the correct box checked. Ammending a tax return   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. Ammending a tax return Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). Ammending a tax return Example. Ammending a tax return You own one share of common stock that you bought on January 3, 2004, for $100. Ammending a tax return The corporation declared a common stock dividend of 5% on June 29, 2013. Ammending a tax return The fair market value of the stock at the time the stock dividend was declared was $200. Ammending a tax return You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. Ammending a tax return You figure your gain or loss as follows: Fair market value of old stock $200. Ammending a tax return 00 Fair market value of stock dividend (cash received) +10. Ammending a tax return 00 Fair market value of old stock and stock dividend $210. Ammending a tax return 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. Ammending a tax return 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. Ammending a tax return 76 Total $100. Ammending a tax return 00 Cash received $10. Ammending a tax return 00 Basis (cost) of stock dividend − 4. Ammending a tax return 76 Gain $5. Ammending a tax return 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. Ammending a tax return Scrip dividends. Ammending a tax return   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. Ammending a tax return The certificate is generally nontaxable when you receive it. Ammending a tax return 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. Ammending a tax return   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. Ammending a tax return You must include its fair market value in income on the date you receive it. Ammending a tax return Other Distributions You may receive any of the following distributions during the year. Ammending a tax return Exempt-interest dividends. Ammending a tax return   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. Ammending a tax return Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Ammending a tax return Information reporting requirement. Ammending a tax return   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. Ammending a tax return This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. Ammending a tax return Alternative minimum tax treatment. Ammending a tax return   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Ammending a tax return See Alternative Minimum Tax (AMT) in chapter 30 for more information. Ammending a tax return Dividends on insurance policies. Ammending a tax return    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. Ammending a tax return However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. Ammending a tax return    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. Ammending a tax return Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. Ammending a tax return Report any taxable distributions on insurance policies on Form 1040, line 21. Ammending a tax return Dividends on veterans' insurance. Ammending a tax return   Dividends you receive on veterans' insurance policies are not taxable. Ammending a tax return In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. Ammending a tax return Patronage dividends. Ammending a tax return   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. Ammending a tax return   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. Ammending a tax return But you must reduce the basis (cost) of the items bought. Ammending a tax return If the dividend is more than the adjusted basis of the assets, you must report the excess as income. Ammending a tax return   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. Ammending a tax return Alaska Permanent Fund dividends. Ammending a tax return    Do not report these amounts as dividends. Ammending a tax return Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. Ammending a tax return How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. Ammending a tax return Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. Ammending a tax return Report qualified dividends on line 9b of Form 1040 or Form 1040A. Ammending a tax return If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. Ammending a tax return See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. Ammending a tax return If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. Ammending a tax return You cannot use Form 1040EZ if you receive any dividend income. Ammending a tax return Form 1099-DIV. Ammending a tax return   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. Ammending a tax return Even if you do not receive Form 1099-DIV, you must report all your dividend income. Ammending a tax return   See Form 1099-DIV for more information on how to report dividend income. Ammending a tax return Form 1040A or 1040. Ammending a tax return    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. Ammending a tax return If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. Ammending a tax return   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. Ammending a tax return 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. Ammending a tax return 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. Ammending a tax return   Enter on line 6 the total of the amounts listed on line 5. Ammending a tax return Also enter this total on line 9a of Form 1040A or 1040. Ammending a tax return Qualified dividends. Ammending a tax return   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. Ammending a tax return The amount in box 1b is already included in box 1a. Ammending a tax return Do not add the amount in box 1b to, or substract it from, the amount in box 1a. Ammending a tax return   Do not include any of the following on line 9b. Ammending a tax return Qualified dividends you received as a nominee. Ammending a tax return See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. Ammending a tax return Dividends on stock for which you did not meet the holding period. Ammending a tax return See Holding period , earlier under Qualified Dividends. Ammending a tax return 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. Ammending a tax return Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. Ammending a tax return 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. Ammending a tax return   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. Ammending a tax return Enter qualified dividends on line 2 of the worksheet. Ammending a tax return Investment interest deducted. Ammending a tax return   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. Ammending a tax return Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. Ammending a tax return This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. Ammending a tax return For more information about the limit on investment interest, see Investment expenses in chapter 23. Ammending a tax return Expenses related to dividend income. Ammending a tax return   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). Ammending a tax return See chapter 28 for general information about deducting expenses of producing income. Ammending a tax return More information. Ammending a tax return    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. Ammending a tax return Prev  Up  Next   Home   More Online Publications
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Understanding Your CP75D Notice

We’re auditing your tax return and we need documentation to verify the income and withholding you reported on your tax return. This may affect your eligibility for the Earned Income Credit (EIC), dependent exemption(s) and other refundable credits that you claimed. We are holding your refund pending the results of the audit.


What you need to do

  • Read the notice and the enclosed forms carefully. They explain the information you must send to us.
  • Provide copies of supporting documentation to verify the items we're auditing.
  • Complete the response form by indicating which items your supporting documentation addresses on the copies you're submitting and return the form with the documents you are submitting.

You may want to


Answers to Common Questions

Why was my return selected for audit?
While most returns are accepted as filed, some are selected for examination. The IRS examines (or audits) some federal tax returns to determine if income, expenses, and credits are reported accurately. The IRS selects returns for examination using various methods which include random sampling, computerized screening, and comparison of information received by the IRS such as Forms W-2 and 1099. Having your return selected for examination doesn't suggest you made an error or were dishonest.

Why are my wages being audited?
The amounts you reported on the wages and withholding lines of your tax return appear incorrect.

Can I claim the earned income credit for my fiancé’s child?
No. You must be married to the child’s parent during the tax year in question to receive EIC.

What do I need to send?
Refer to the applicable Form 886-H and Form 886-L you received with your notice. There is a separate form for each item being audited that explains what supporting documentation to send.

What if I can’t provide the requested documentation?
We’ll disallow the items being audited and send you an examination report that shows the proposed changes to your tax return.

What if I did not file a tax return claiming the items you are questioning and someone else is using my name and social security number?
Contact us at the number listed on the top right corner of your notice. You can also refer to the IRS Identity Theft resource page for more information.

Can I file my tax return while I am being audited?
Yes, you should continue to file all required tax returns before the due date to avoid additional penalties and interest.


Tips for next year

Avoid errors that can delay your refund or result in IRS denying your EITC claim. Find out the most common errors in claiming EITC here.

Page Last Reviewed or Updated: 07-Mar-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Ammending A Tax Return

Ammending a tax return Index Symbols $10,000, pagos en efectivo en exceso de, Introducción A Asistencia (see Ayuda con los impuestos) Ayuda (see Ayuda con los impuestos) Ayuda con los impuestos, Cómo Obtener Ayuda con los Impuestos D Defensor del Contribuyente, Servicio del Defensor del Contribuyente. Ammending a tax return F Formulario, ¿Quién tiene que presentar el Formulario 8300-SP? 8300-SP, ¿Quién tiene que presentar el Formulario 8300-SP? I Información adicional (see Ayuda con los impuestos) Informe de pagos en efectivo en exceso de $10,000, Introducción P Publicaciones (see Ayuda con los impuestos) Q Qué Hay de Nuevo, Qué Hay de Nuevo S Servicios gratuitos para los impuestos, Servicios gratuitos para los impuestos. Ammending a tax return T Transacciones en efectivo en exceso de $10,000, Introducción Prev  Up     Home   More Online Publications