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File 1040

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File 1040

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

 

Facts about the Premium Tax Credit

 

Publication 5120 –Your Credit, Your Choice – Get it Now or Get it Later   English | Spanish

 

Publication 5121 –Need help paying for health insurance premiums?   English | Spanish

 

NOTE - The following information does not affect your 2013 tax return that you are filing in 2014. You do not need to file a 2013 federal tax return solely to establish eligibility or qualify for advance payment of the premium tax credit.
 

Basic Information

Starting in 2014, if you get your health insurance coverage through the Health Insurance Marketplace, you may be eligible for the premium tax credit. This tax credit can help make purchasing health insurance coverage more affordable for people with moderate incomes. The open enrollment period to purchase health insurance coverage for 2014 through the Marketplace runs from Oct. 1, 2013, through March 31, 2014.

The Department of Health and Human Services administers the requirements for the Marketplace and the health plans they offer. For more information about your coverage options, financial assistance and the Marketplace, visit HealthCare.gov.

Eligibility

In general, you may be eligible for the credit if you meet all of the following:

  • buy health insurance through the Marketplace;
  • are ineligible for coverage through an employer or government plan;
  • are within certain income limits;
  • do not file a Married Filing Separately tax return (unless you meet the criteria in Notice 2014-23, which allows certain victims of domestic abuse to claim the premium tax credit using the Married Filing Separately filing status for the 2014 calendar year); and
  • cannot be claimed as a dependent by another person.

Filing Status

If you file your tax return using the filing status Single, Married Filing Jointly, Head of Household (including married individuals who qualify to use the Head of Household status) or Qualifying Widow/Widower, you may be eligible for the premium tax credit if you meet the other criteria. If you are married and you file your tax return using the filing status Married Filing Separately, you will not be eligible for the premium tax credit unless you meet the criteria in Notice 2014-23, which allows certain victims of domestic abuse to claim the premium tax credit using the Married Filing Separately filing status for the 2014 calendar year.

Getting the Credit

To qualify for the credit, you must get insurance through the Marketplace.

If you are eligible for the credit, you can choose to:

  • Get It Now: have some or all of the estimated credit paid in advance directly to your insurance company to lower what you pay out-of-pocket for your monthly premiums during 2014; or
  • Get It Later: wait to get all of the credit when you file your 2014 tax return in 2015.

During enrollment through the Marketplace, using information you provide about your projected income and family composition for 2014, the Marketplace will estimate the amount of the premium tax credit you will be able to claim for the 2014 tax year that you will file in 2015.

You will then decide whether you want to have all, some or none of your estimated credit paid in advance directly to your insurance company.

Change in Circumstances

Report income and family size changes to the Marketplace throughout the year. Reporting changes will help make sure you get the proper type and amount of financial assistance and will help you avoid getting too much or too little in advance. Receiving too much or too little in advance can affect your refund or balance due when you file your 2014 tax return in 2015.

For example, if you do not report income or family size changes to the Marketplace when they happen in 2014, the advance payments may not match your actual qualified credit amount on your federal tax return that you will file in 2015. This might result in a smaller refund or a balance due.

Claiming the Credit on Your Federal Tax Return

For any tax year, if you receive advance credit payments in any amount or if you plan to claim the premium tax credit, you must file a federal income tax return for that year. 

If you choose to get it now: When you file your 2014 tax return in 2015, you will subtract the total advance payments you received during the year from the amount of the premium tax credit calculated on your tax return. If the premium tax credit computed on the return is more than the advance payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax you owe. If the advance credit payments are more than the premium tax credit, the difference will increase the amount you owe and result in either a smaller refund or a balance due.

If you choose to get it later: You will claim the full amount of the premium tax credit when you file your 2014 tax return in 2015. This will either increase your refund or lower your balance due.

More Information

More detailed information about the credit is available in our Questions and Answers.
The Department of the Treasury and the IRS issued the following legal guidance related to the premium tax credit:

  • Final regulations on the rules for individuals who enroll in qualified health plans through Marketplaces and claim the premium tax credit.
  • Final regulations on the premium tax credit affordability test for related individuals.
  • Proposed regulations on determining minimum value of eligible employer-sponsored plans and other rules regarding the premium tax credit.
  • Notice 2013-41 on determining whether or when individuals are considered eligible for coverage under certain Medicaid, Medicare, CHIP, TRICARE, student health or state high risk pool programs.

An electronic flyer (Publication 5120 English | Spanish ) and trifold (Publication 5121 English | Spanish ) entitled Facts about the Premium Tax Credit are available for public use and distribution.

 

Page Last Reviewed or Updated: 26-Mar-2014

The File 1040

File 1040 Index A Accounting methods, Accounting Methods Accrual method, Accrual method. File 1040 Change in accounting method Section 481(a) adjustment. File 1040 , Change in accounting method. File 1040 Mark-to-market accounting method, Mark-to-market accounting method. File 1040 Nonaccrual experience method, Nonaccrual experience method. File 1040 Percentage of completion method, Percentage of completion method. File 1040 Accounting periods, Accounting Periods Accumulated earnings tax, Accumulated Earnings Tax Alternative minimum tax (AMT), Alternative Minimum Tax (AMT) At-risk limits, At-Risk Limits B Backup withholding, Backup withholding. File 1040 Below-market loans, Below-Market Loans C Capital contributions, Capital Contributions Capital losses, Capital Losses Charitable contributions, Charitable Contributions Closely held corporation: At-risk limits, Closely held corporation. File 1040 Closely held corporations:, Closely held corporations. File 1040 Comments, Comments and suggestions. File 1040 Corporate preference items, Corporate Preference Items Corporations, businesses taxed as, Businesses Taxed as Corporations Credits, Credits Credits: Foreign tax, Credits General business credit, Credits Prior year minimum tax, Credits D Distributions: Money or property. File 1040 , Money or Property Distributions Other, Constructive Distributions Reporting, Reporting Dividends and Other Distributions Stock or stock rights, Distributions of Stock or Stock Rights To shareholders, Distributions to Shareholders Dividends-received deduction, Dividends-Received Deduction E EFTPS, Electronic Federal Tax Payment System, Electronic Federal Tax Payment System (EFTPS). File 1040 Electronic filing, Electronic filing. File 1040 Energy-efficient commercial building property deduction, Energy-Efficient Commercial Building Property Deduction Estimated tax, Estimated Tax Extraordinary dividends, Extraordinary Dividends F Figuring: NOL carryovers, Figuring the NOL Carryover Tax, Figuring Tax Foreign tax credit, Credits Form: 1096, Form 1099-DIV. File 1040 1099–DIV, Form 1099-DIV. File 1040 1118, Credits 1120, Which form to file. File 1040 1120-W, How to figure each required installment. File 1040 1120X, Refunds. File 1040 , NOL carryback. File 1040 1138, Carryback expected. File 1040 1139, Refunds. File 1040 , NOL carryback. File 1040 2220, Form 2220. File 1040 3800, Credits, Recapture Taxes 4255, Recapture Taxes 4626, Form 4626. File 1040 5452, Form 5452. File 1040 7004, Extension of time to file. File 1040 8611, Recapture Taxes 8827, Credits 8832, Business formed after 1996. File 1040 8834, Recapture Taxes 8845, Recapture Taxes 8874, Recapture Taxes 8882, Recapture Taxes 8912, Credits G Going into business, Costs of Going Into Business I Income tax returns, Income Tax Return L Loans, below-market, Below-Market Loans M Minimum tax credit, Credits N Net operating losses, Net Operating Losses Nontaxable exchange of property for stock, Property Exchanged for Stock P Paid-in capital, Paid-in capital. File 1040 Passive activity limits, Passive Activity Limits Paying estimated tax, How to pay estimated tax. File 1040 Penalties Other, Other penalties. File 1040 Trust fund recovery, Trust fund recovery penalty. File 1040 Penalties: Estimated tax, Underpayment penalty. File 1040 Late filing of return, Late filing of return. File 1040 Late payment of tax, Late payment of tax. File 1040 Personal service corporation: Figuring tax, Qualified personal service corporation. File 1040 Personal service corporations:, Personal service corporations. File 1040 Preference items, Corporate Preference Items Q Qualified refinery property, election to expense, Election to Expense Qualified Refinery Property Qualifying shipping activities, income from, Income From Qualifying Shipping Activities R Recapture taxes: Childcare facilities and services credit , Recapture Taxes Indian employment credit, Recapture Taxes Investment credit, Recapture Taxes Low-income housing credit, Recapture Taxes New markets credit, Recapture Taxes Qualified plug-in electric and electric vehicle credit, Recapture Taxes Recordkeeping, Recordkeeping Related persons, Related Persons Retained earnings, Accumulated Earnings Tax S Suggestions, Comments and suggestions. File 1040 T Tax help, How To Get Tax Help Tax rate schedule, Tax Rate Schedule Tax, figuring, Figuring Tax Taxpayer Advocate, Contacting your Taxpayer Advocate. File 1040 TTY/TDD information, How To Get Tax Help Prev  Up     Home   More Online Publications