IRS Form 1099-DIV – Dividends and Distributions – If you invest in stocks, mutual funds, ETFs, or REITs, you’ve likely received (or will soon receive) IRS Form 1099-DIV. This critical tax document reports dividends and distributions paid to you during the year. Understanding it helps you file accurately, claim lower tax rates on qualified dividends, handle capital gain distributions, and avoid IRS issues.
In this comprehensive guide, we break down what Form 1099-DIV is, who receives it, how to read every key box, tax implications, and step-by-step reporting on your 2025 tax return (filed in 2026).
What Is IRS Form 1099-DIV?
Form 1099-DIV, Dividends and Distributions, is an information return that brokers, mutual funds, corporations, and other payers use to report dividends, capital gain distributions, and certain other payments to investors and the IRS.
Payers must issue the form when:
- Dividends and distributions total $10 or more.
- Liquidation distributions reach $600 or more.
- Any federal income tax is withheld (backup withholding).
- Foreign tax is paid on dividends.
The form helps the IRS track investment income. Recipients use it to report taxable amounts on Form 1040.
Download the official form: IRS Form 1099-DIV PDF
Examples of Form 1099-DIV (Copy B for recipient). Always use the version that matches your tax year.
Who Receives a 1099-DIV?
You’ll receive one (or more) if you’re a U.S. person (individual, trust, estate) and meet the thresholds above. Common sources include:
- Brokerage accounts
- Mutual funds and ETFs
- REITs
- Corporate stock investments
Corporations, tax-exempt organizations, IRAs, and certain other entities generally do not receive 1099-DIVs for dividends.
Payers send Copy B to you by January 31, 2026 (for 2025 tax year) and file with the IRS shortly after.
How to Read Your Form 1099-DIV: Box-by-Box Breakdown?
Here’s what the most important boxes mean and how they affect your taxes:
| Box | Description | Tax Impact |
|---|---|---|
| 1a | Total ordinary dividends (includes qualified) | Taxed as ordinary income unless qualified. Report on Form 1040, line 3b. |
| 1b | Qualified dividends | Eligible for lower long-term capital gains rates (0%, 15%, or 20%). Report on Form 1040, line 3a. |
| 2a | Total capital gain distributions | Treated as long-term capital gains. Report on Schedule D. |
| 2b | Unrecaptured Section 1250 gain | Taxed at a maximum 25% rate (portion of 2a). |
| 2c | Section 1202 gain | May qualify for partial or full exclusion (small business stock). |
| 2d | Collectibles (28%) gain | Taxed at up to 28% (portion of 2a). |
| 3 | Nondividend distributions | Return of capital — reduces your cost basis. Not taxable until basis reaches zero. |
| 4 | Federal income tax withheld | Credit against your tax liability (backup withholding). |
| 5 | Section 199A dividends | Eligible for up to 20% qualified business income deduction (REITs and certain RICs). |
| 7 | Foreign tax paid | Claim as itemized deduction or foreign tax credit. |
| 9 & 10 | Cash / Noncash liquidation distributions | May be partly taxable as capital gain. |
| 12 | Exempt-interest dividends | Generally tax-exempt (but may affect AMT). |
| 13 | Specified private activity bond interest dividends | Included in box 12; may trigger alternative minimum tax (AMT). |
Other boxes include state tax withheld (14–16) and FATCA filing requirement (11).
Pro tip: Qualified dividends (Box 1b) must meet holding period and other IRS rules to qualify for preferential rates.
Tax Treatment of Dividends and Distributions
- Ordinary dividends (Box 1a) → Taxed at your regular income tax rate.
- Qualified dividends (Box 1b) → Taxed at long-term capital gains rates (0%, 15%, or 20% depending on taxable income).
- Capital gain distributions (Box 2a) → Always long-term, regardless of how long you held the investment. Taxed at preferential rates.
- Nondividend distributions (Box 3) → Reduce your basis in the stock/fund. Excess over basis is capital gain.
- Foreign tax paid (Box 7) → Avoids double taxation via credit (Form 1116) or deduction.
Section 199A dividends (Box 5) can provide an additional deduction, lowering taxable income.
How to Report Form 1099-DIV on Your 2025 Tax Return?
- Form 1040:
- Line 3a: Qualified dividends (from Box 1b)
- Line 3b: Ordinary dividends (from Box 1a)
- Schedule B (Interest and Ordinary Dividends):
- Required if total dividends + interest > $1,500, or if you have nominee dividends, or foreign accounts. List each payer and amount from Box 1a.
- Schedule D (Capital Gains and Losses):
- Report capital gain distributions from Box 2a on line 13.
- Use additional worksheets for unrecaptured Section 1250 gain, 28% gain, and Section 1202 exclusions.
- Qualified Dividends and Capital Gain Tax Worksheet (in Form 1040 instructions) → Calculates the preferential tax rate automatically.
If you use tax software (TurboTax, H&R Block, etc.), import or enter the 1099-DIV directly — it populates the forms automatically.
Note: Always report all taxable dividends even if you don’t receive a 1099-DIV (e.g., small amounts under $10).
Common Questions and Mistakes to Avoid
- I didn’t receive my 1099-DIV → Contact the payer (broker/fund). You’re still responsible for reporting the income.
- What about reinvested dividends? → They’re taxable even if you didn’t receive cash.
- State taxes → Many states tax dividends; report state withholding from Boxes 14–16.
- AMT considerations → Exempt-interest dividends (Box 12/13) may increase alternative minimum tax.
- Nominee distributions → If you received dividends for someone else, file a separate 1099-DIV for them.
Mistake to avoid: Forgetting to reduce basis with nondividend distributions (Box 3) — this can lead to overpaying capital gains tax later when you sell.
Tips for Investors
- Track your cost basis carefully, especially with return-of-capital distributions.
- Consider tax-efficient investments (e.g., municipal bond funds for exempt-interest dividends).
- Use tax-advantaged accounts (IRA, 401(k)) to shelter dividend income when possible.
- Review your consolidated 1099 (many brokers combine 1099-DIV, 1099-INT, 1099-B).
Final Thoughts
Form 1099-DIV is your key to properly reporting investment income and potentially qualifying for lower tax rates on qualified dividends and capital gains. Taking time to understand the boxes can save you money and stress during tax season.
For the most accurate guidance, refer to the official IRS instructions or consult a tax professional, especially if you have complex situations like foreign investments, large capital gain distributions, or AMT exposure.
Need the latest forms? Visit IRS.gov or download the 1099-DIV directly from the link provided by the IRS.
This article is for informational purposes only and is not tax advice. Tax laws can change — always verify with current IRS publications or a qualified advisor for your specific situation.