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How Do I Amend My Tax Return

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How Do I Amend My Tax Return

How do i amend my tax return 9. How do i amend my tax return   Education Exception to Additional Tax on Early IRA Distributions Table of Contents Introduction Who Is Eligible Figuring the Amount Not Subject to the 10% Tax Reporting Early Distributions Introduction Generally, if you take a distribution from your IRA before you reach age 59½, you must pay a 10% additional tax on the early distribution. How do i amend my tax return This applies to any IRA you own, whether it is a traditional IRA (including a SEP-IRA), a Roth IRA, or a SIMPLE IRA. How do i amend my tax return The additional tax on an early distribution from a SIMPLE IRA may be as high as 25%. How do i amend my tax return See Publication 560, Retirement Plans for Small Business, for information on SEP-IRAs, and Publication 590, for information about all other IRAs. How do i amend my tax return However, you can take distributions from your IRAs for qualified higher education expenses without having to pay the 10% additional tax. How do i amend my tax return You may owe income tax on at least part of the amount distributed, but you may not have to pay the 10% additional tax. How do i amend my tax return Generally, if the taxable part of the distribution is less than or equal to the adjusted qualified education expenses (AQEE), none of the distribution is subject to the additional tax. How do i amend my tax return If the taxable part of the distribution is more than the AQEE, only the excess is subject to the additional tax. How do i amend my tax return Who Is Eligible You can take a distribution from your IRA before you reach age 59½ and not have to pay the 10% additional tax if, for the year of the distribution, you pay qualified education expenses for: yourself, your spouse, or your or your spouse's child, foster child, adopted child, or descendant of any of them. How do i amend my tax return Qualified education expenses. How do i amend my tax return   For purposes of the 10% additional tax, these expenses are tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. How do i amend my tax return They also include expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance. How do i amend my tax return   In addition, if the student is at least a half-time student, room and board are qualified education expenses. How do i amend my tax return   The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts. How do i amend my tax return The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student. How do i amend my tax return The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. How do i amend my tax return You will need to contact the eligible educational institution for qualified room and board costs. How do i amend my tax return Eligible educational institution. How do i amend my tax return   An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U. How do i amend my tax return S. How do i amend my tax return Department of Education. How do i amend my tax return It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. How do i amend my tax return The educational institution should be able to tell you if it is an eligible educational institution. How do i amend my tax return   Certain educational institutions located outside the United States also participate in the U. How do i amend my tax return S. How do i amend my tax return Department of Education's Federal Student Aid (FSA) programs. How do i amend my tax return Half-time student. How do i amend my tax return   A student is enrolled “at least half-time” if he or she is enrolled for at least half the full-time academic work load for the course of study the student is pursuing as determined under the standards of the school where the student is enrolled. How do i amend my tax return Figuring the Amount Not Subject to the 10% Tax To determine the amount of your distribution that is not subject to the 10% additional tax, first figure your adjusted qualified education expenses. How do i amend my tax return You do this by reducing your total qualified education expenses by any tax-free educational assistance, which includes: Expenses used to figure the tax-free portion of distributions from a Coverdell education savings account (ESA) (see Distributions in chapter 7, Coverdell Education Savings Account), The tax-free part of scholarships and fellowships (see Tax-Free Scholarships and Fellowships in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Pell grants (see Pell Grants and Other Title IV Need-Based Education Grants in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Veterans' educational assistance (see Veterans' Benefits in chapter 1, Scholarships, Fellowships, Grants, and Tuition Reductions), Employer-provided educational assistance (see chapter 11, Employer-Provided Educational Assistance ), and Any other nontaxable (tax-free) payments (other than gifts or inheritances) received as educational assistance. How do i amend my tax return Do not reduce the qualified education expenses by amounts paid with funds the student receives as: Payment for services, such as wages, A loan, A gift, An inheritance given to either the student or the individual making the withdrawal, or A withdrawal from personal savings (including savings from a qualified tuition program (QTP)). How do i amend my tax return If your IRA distribution is equal to or less than your adjusted qualified education expenses, you are not subject to the 10% additional tax. How do i amend my tax return Example 1. How do i amend my tax return In 2013, Erin (age 32) took a year off from teaching to attend graduate school full-time. How do i amend my tax return She paid $5,800 of qualified education expenses from the following sources. How do i amend my tax return   Employer-provided educational assistance  (tax free) $5,000     Early distribution from IRA (includes $500 taxable earnings) 3,200           Before Erin can determine if she must pay the 10% additional tax on her IRA distribution, she must reduce her total qualified education expenses. How do i amend my tax return   Total qualified education expenses $5,800     Minus: Tax-free educational assistance −5,000     Equals: Adjusted qualified  education expenses (AQEE) $ 800   Because Erin's AQEE ($800) are more than the taxable portion of her IRA distribution ($500), she does not have to pay the 10% additional tax on any part of this distribution. How do i amend my tax return However, she must include the $500 taxable earnings in her gross income subject to income tax. How do i amend my tax return Example 2. How do i amend my tax return Assume the same facts as in Example 1 , except that Erin deducted some of the contributions to her IRA, so the taxable part of her early distribution is higher by $1,000. How do i amend my tax return This must be included in her income subject to income tax. How do i amend my tax return The taxable part of Erin's IRA distribution ($1,000) is larger than her $800 AQEE. How do i amend my tax return Therefore, she must pay the 10% additional tax on $200, the taxable part of her distribution ($1,000) that is more than her qualified education expenses ($800). How do i amend my tax return She does not have to pay the 10% additional tax on the remaining $800 of her taxable distribution. How do i amend my tax return Reporting Early Distributions By January 31, 2014, the payer of your IRA distribution should send you Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. How do i amend my tax return The information on this form will help you determine how much of your distribution is taxable for income tax purposes and how much is subject to the 10% additional tax. How do i amend my tax return If you received an early distribution from your IRA, you must report the taxable earnings on Form 1040, line 15b (Form 1040NR, line 16b). How do i amend my tax return Then, if you qualify for an exception for qualified higher education expenses, you must file Form 5329 to show how much, if any, of your early distribution is subject to the 10% additional tax. How do i amend my tax return See the Instructions for Form 5329, Part I, for help in completing the form and entering the results on Form 1040 or 1040NR. How do i amend my tax return There are many other situations in which Form 5329 is required. How do i amend my tax return If, during 2013, you had other distributions from IRAs or qualified retirement plans, or have made excess contributions to certain tax-favored accounts, see the instructions for line 58 (Form 1040) or line 56 (Form 1040NR) to determine if you must file Form 5329. How do i amend my tax return Prev  Up  Next   Home   More Online Publications
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How do i amend my tax return 8. How do i amend my 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. How do i amend my tax return Reporting tax withheld. How do i amend my tax return Nominees. How do i amend my tax return Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. How do i amend my tax return Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. How do i amend my tax return Alternative minimum tax treatment. How do i amend my tax return How To Report Dividend IncomeInvestment interest deducted. How do i amend my tax return Reminder Foreign-source income. How do i amend my tax return  If you are a U. How do i amend my tax return S. How do i amend my 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. How do i amend my tax return S. How do i amend my tax return law. How do i amend my 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. How do i amend my 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. How do i amend my tax return This chapter also explains how to report dividend income on your tax return. How do i amend my tax return Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. How do i amend my tax return You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. How do i amend my tax return However, some amounts you receive that are called dividends are actually interest income. How do i amend my tax return (See Dividends that are actually interest under Taxable Interest in chapter 7. How do i amend my tax return ) Most distributions are paid in cash (or check). How do i amend my tax return However, distributions can consist of more stock, stock rights, other property, or services. How do i amend my 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. How do i amend my tax return Tax on unearned income of certain children. How do i amend my tax return   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. How do i amend my 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. How do i amend my tax return If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. How do i amend my tax return    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. How do i amend my tax return Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. How do i amend my tax return   For more information about the tax on unearned income of children and the parents' election, see chapter 31. How do i amend my tax return Beneficiary of an estate or trust. How do i amend my tax return    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. How do i amend my tax return You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. How do i amend my tax return , from the fiduciary. How do i amend my 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. How do i amend my tax return Social security number (SSN) or individual taxpayer identification number (ITIN). How do i amend my 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. How do i amend my tax return This includes payers of dividends. How do i amend my tax return If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. How do i amend my tax return For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. How do i amend my tax return Backup withholding. How do i amend my tax return   Your dividend income is generally not subject to regular withholding. How do i amend my tax return However, it may be subject to backup withholding to ensure that income tax is collected on the income. How do i amend my 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. How do i amend my tax return   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. How do i amend my tax return For more information, see Backup Withholding in chapter 4. How do i amend my tax return Stock certificate in two or more names. How do i amend my 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. How do i amend my tax return Form 1099-DIV. How do i amend my 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. How do i amend my tax return Keep this form with your records. How do i amend my tax return You do not have to attach it to your tax return. How do i amend my tax return Dividends not reported on Form 1099-DIV. How do i amend my tax return   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. How do i amend my tax return For example, you may receive distributive shares of dividends from partnerships or S corporations. How do i amend my tax return These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. How do i amend my tax return , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. How do i amend my tax return Reporting tax withheld. How do i amend my tax return   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. How do i amend my tax return Nominees. How do i amend my 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. How do i amend my tax return Form 1099-MISC. How do i amend my 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. How do i amend my tax return See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. How do i amend my tax return Incorrect amount shown on a Form 1099. How do i amend my 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. How do i amend my tax return The new Form 1099 you receive will be marked “Corrected. How do i amend my tax return ” Dividends on stock sold. How do i amend my 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. How do i amend my tax return Dividends received in January. How do i amend my 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. How do i amend my tax return You report the dividend in the year it was declared. How do i amend my tax return Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. How do i amend my tax return They are paid out of earnings and profits and are ordinary income to you. How do i amend my tax return This means they are not capital gains. How do i amend my 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. How do i amend my tax return Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. How do i amend my 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. How do i amend my tax return They should be shown in box 1b of the Form 1099-DIV you receive. How do i amend my 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. How do i amend my tax return 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. How do i amend my tax return 6%. How do i amend my tax return 20% on any amount that otherwise would be taxed at a 39. How do i amend my tax return 6% rate. How do i amend my tax return To qualify for the maximum rate, all of the following requirements must be met. How do i amend my tax return The dividends must have been paid by a U. How do i amend my tax return S. How do i amend my tax return corporation or a qualified foreign corporation. How do i amend my tax return (See Qualified foreign corporation , later. How do i amend my tax return ) The dividends are not of the type listed later under Dividends that are not qualified dividends . How do i amend my tax return You meet the holding period (discussed next). How do i amend my tax return Holding period. How do i amend my 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. How do i amend my 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. How do i amend my tax return Instead, the seller will get the dividend. How do i amend my 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. How do i amend my tax return See the examples later. How do i amend my tax return Exception for preferred stock. How do i amend my 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. How do i amend my tax return If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. How do i amend my tax return Example 1. How do i amend my tax return You bought 5,000 shares of XYZ Corp. How do i amend my tax return common stock on July 9, 2013. How do i amend my tax return XYZ Corp. How do i amend my tax return paid a cash dividend of 10 cents per share. How do i amend my tax return The ex-dividend date was July 16, 2013. How do i amend my tax return Your Form 1099-DIV from XYZ Corp. How do i amend my tax return shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). How do i amend my tax return However, you sold the 5,000 shares on August 12, 2013. How do i amend my tax return You held your shares of XYZ Corp. How do i amend my tax return for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). How do i amend my tax return The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. How do i amend my tax return You have no qualified dividends from XYZ Corp. How do i amend my tax return because you held the XYZ stock for less than 61 days. How do i amend my tax return Example 2. How do i amend my 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. How do i amend my tax return You held the stock for 63 days (from July 16, 2013, through September 16, 2013). How do i amend my 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). How do i amend my tax return Example 3. How do i amend my tax return You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. How do i amend my tax return ABC Mutual Fund paid a cash dividend of 10 cents a share. How do i amend my tax return The ex-dividend date was July 16, 2013. How do i amend my 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. How do i amend my tax return Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. How do i amend my tax return However, you sold the 10,000 shares on August 12, 2013. How do i amend my tax return You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. How do i amend my tax return Holding period reduced where risk of loss is diminished. How do i amend my 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. How do i amend my 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. How do i amend my tax return You were grantor (writer) of an option to buy substantially identical stock or securities. How do i amend my tax return Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. How do i amend my tax return   For information about how to apply condition (3), see Regulations section 1. How do i amend my tax return 246-5. How do i amend my tax return Qualified foreign corporation. How do i amend my tax return   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. How do i amend my tax return The corporation is incorporated in a U. How do i amend my tax return S. How do i amend my tax return possession. How do i amend my 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. How do i amend my tax return For a list of those treaties, see Table 8-1. How do i amend my 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. How do i amend my tax return See Readily tradable stock , later. How do i amend my tax return Exception. How do i amend my 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. How do i amend my tax return Readily tradable stock. How do i amend my 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. How do i amend my tax return For a list of the exchanges that meet these requirements, see www. How do i amend my tax return sec. How do i amend my tax return gov/divisions/marketreg/mrexchanges. How do i amend my tax return shtml. How do i amend my tax return Dividends that are not qualified dividends. How do i amend my tax return   The following dividends are not qualified dividends. How do i amend my tax return They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. How do i amend my tax return Capital gain distributions. How do i amend my tax return Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. How do i amend my tax return S. How do i amend my tax return building and loan associations, U. How do i amend my tax return S. How do i amend my tax return savings and loan associations, federal savings and loan associations, and similar financial institutions. How do i amend my tax return (Report these amounts as interest income. How do i amend my 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. How do i amend my 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. How do i amend my 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. How do i amend my tax return Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. How do i amend my 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. How do i amend my tax return Table 8-1. How do i amend my tax return Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. How do i amend my 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. How do i amend my 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. How do i amend my tax return Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. How do i amend my 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. How do i amend my 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. How do i amend my 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. How do i amend my tax return But you may be able to deduct the service charge. How do i amend my tax return See chapter 28 for more information about deducting expenses of producing income. How do i amend my 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. How do i amend my 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. How do i amend my tax return When figuring this amount, use the fair market value of the stock on the dividend payment date. How do i amend my tax return Money Market Funds Report amounts you receive from money market funds as dividend income. How do i amend my tax return Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. How do i amend my 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). How do i amend my tax return They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. How do i amend my 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. How do i amend my tax return Undistributed capital gains of mutual funds and REITs. How do i amend my tax return    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. How do i amend my tax return You must treat your share of these gains as distributions, even though you did not actually receive them. How do i amend my tax return However, they are not included on Form 1099-DIV. How do i amend my tax return Instead, they are reported to you in box 1a of Form 2439. How do i amend my 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. How do i amend my tax return   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. How do i amend my tax return You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. How do i amend my tax return Attach Copy B of Form 2439 to your return, and keep Copy C for your records. How do i amend my tax return Basis adjustment. How do i amend my 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. How do i amend my tax return Additional information. How do i amend my tax return   For more information on the treatment of distributions from mutual funds, see Publication 550. How do i amend my 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. How do i amend my tax return You should receive a Form 1099-DIV or other statement showing the nondividend distribution. How do i amend my tax return On Form 1099-DIV, a nondividend distribution will be shown in box 3. How do i amend my tax return If you do not receive such a statement, you report the distribution as an ordinary dividend. How do i amend my tax return Basis adjustment. How do i amend my tax return   A nondividend distribution reduces the basis of your stock. How do i amend my tax return It is not taxed until your basis in the stock is fully recovered. How do i amend my 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. How do i amend my 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. How do i amend my tax return   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. How do i amend my tax return Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. How do i amend my tax return See Holding Period in chapter 14. How do i amend my tax return Example. How do i amend my tax return You bought stock in 2000 for $100. How do i amend my tax return In 2003, you received a nondividend distribution of $80. How do i amend my tax return You did not include this amount in your income, but you reduced the basis of your stock to $20. How do i amend my tax return You received a nondividend distribution of $30 in 2013. How do i amend my tax return The first $20 of this amount reduced your basis to zero. How do i amend my tax return You report the other $10 as a long-term capital gain for 2013. How do i amend my tax return You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. How do i amend my tax return Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. How do i amend my tax return These distributions are, at least in part, one form of a return of capital. How do i amend my tax return They may be paid in one or more installments. How do i amend my tax return You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. How do i amend my tax return For more information on liquidating distributions, see chapter 1 of Publication 550. How do i amend my tax return Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. How do i amend my tax return Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. How do i amend my tax return Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. How do i amend my tax return Taxable stock dividends and stock rights. How do i amend my tax return   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. How do i amend my tax return You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. How do i amend my 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. How do i amend my tax return The distribution is in convertible preferred stock and has the same result as in (2). How do i amend my tax return The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. How do i amend my tax return The distribution is on preferred stock. How do i amend my 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. How do i amend my tax return )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. How do i amend my tax return If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. How do i amend my tax return Preferred stock redeemable at a premium. How do i amend my 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. How do i amend my tax return For more information, see chapter 1 of Publication 550. How do i amend my tax return Basis. How do i amend my tax return   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. How do i amend my 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. How do i amend my tax return Fractional shares. How do i amend my 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. How do i amend my 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. How do i amend my 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. How do i amend my tax return Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. How do i amend my 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. How do i amend my tax return    Report these transactions on Form 8949 with the correct box checked. How do i amend my tax return   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. How do i amend my tax return Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). How do i amend my tax return Example. How do i amend my tax return You own one share of common stock that you bought on January 3, 2004, for $100. How do i amend my tax return The corporation declared a common stock dividend of 5% on June 29, 2013. How do i amend my tax return The fair market value of the stock at the time the stock dividend was declared was $200. How do i amend my tax return You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. How do i amend my tax return You figure your gain or loss as follows: Fair market value of old stock $200. How do i amend my tax return 00 Fair market value of stock dividend (cash received) +10. How do i amend my tax return 00 Fair market value of old stock and stock dividend $210. How do i amend my tax return 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. How do i amend my tax return 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. How do i amend my tax return 76 Total $100. How do i amend my tax return 00 Cash received $10. How do i amend my tax return 00 Basis (cost) of stock dividend − 4. How do i amend my tax return 76 Gain $5. How do i amend my 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. How do i amend my tax return Scrip dividends. How do i amend my tax return   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. How do i amend my tax return The certificate is generally nontaxable when you receive it. How do i amend my 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. How do i amend my 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. How do i amend my tax return You must include its fair market value in income on the date you receive it. How do i amend my tax return Other Distributions You may receive any of the following distributions during the year. How do i amend my tax return Exempt-interest dividends. How do i amend my 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. How do i amend my tax return Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. How do i amend my tax return Information reporting requirement. How do i amend my tax return   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. How do i amend my tax return This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. How do i amend my tax return Alternative minimum tax treatment. How do i amend my tax return   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. How do i amend my tax return See Alternative Minimum Tax (AMT) in chapter 30 for more information. How do i amend my tax return Dividends on insurance policies. How do i amend my tax return    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. How do i amend my tax return However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. How do i amend my 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. How do i amend my 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. How do i amend my tax return Report any taxable distributions on insurance policies on Form 1040, line 21. How do i amend my tax return Dividends on veterans' insurance. How do i amend my tax return   Dividends you receive on veterans' insurance policies are not taxable. How do i amend my tax return In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. How do i amend my tax return Patronage dividends. How do i amend my tax return   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. How do i amend my 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. How do i amend my tax return But you must reduce the basis (cost) of the items bought. How do i amend my tax return If the dividend is more than the adjusted basis of the assets, you must report the excess as income. How do i amend my tax return   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. How do i amend my tax return Alaska Permanent Fund dividends. How do i amend my tax return    Do not report these amounts as dividends. How do i amend my tax return Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. How do i amend my tax return How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. How do i amend my tax return Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. How do i amend my tax return Report qualified dividends on line 9b of Form 1040 or Form 1040A. How do i amend my tax return If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. How do i amend my tax return See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. How do i amend my tax return If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. How do i amend my tax return You cannot use Form 1040EZ if you receive any dividend income. How do i amend my tax return Form 1099-DIV. How do i amend my 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. How do i amend my tax return Even if you do not receive Form 1099-DIV, you must report all your dividend income. How do i amend my tax return   See Form 1099-DIV for more information on how to report dividend income. How do i amend my tax return Form 1040A or 1040. How do i amend my 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. How do i amend my tax return If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. How do i amend my tax return   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. How do i amend my 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. How do i amend my 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. How do i amend my tax return   Enter on line 6 the total of the amounts listed on line 5. How do i amend my tax return Also enter this total on line 9a of Form 1040A or 1040. How do i amend my tax return Qualified dividends. How do i amend my tax return   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. How do i amend my tax return The amount in box 1b is already included in box 1a. How do i amend my tax return Do not add the amount in box 1b to, or substract it from, the amount in box 1a. How do i amend my tax return   Do not include any of the following on line 9b. How do i amend my tax return Qualified dividends you received as a nominee. How do i amend my tax return See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. How do i amend my tax return Dividends on stock for which you did not meet the holding period. How do i amend my tax return See Holding period , earlier under Qualified Dividends. How do i amend my 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. How do i amend my tax return Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. How do i amend my 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. How do i amend my 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. How do i amend my tax return Enter qualified dividends on line 2 of the worksheet. How do i amend my tax return Investment interest deducted. How do i amend my 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. How do i amend my tax return Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. How do i amend my tax return This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. How do i amend my tax return For more information about the limit on investment interest, see Investment expenses in chapter 23. How do i amend my tax return Expenses related to dividend income. How do i amend my tax return   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). How do i amend my tax return See chapter 28 for general information about deducting expenses of producing income. How do i amend my tax return More information. How do i amend my 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. How do i amend my tax return Prev  Up  Next   Home   More Online Publications