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Whether you need to file dividends form to report investment earnings like 1099-DIV Box 1 cash dividend, or report miscellaneous income such as 1099-MISC Box 3 prize winnings, understanding what is 1099-DIV and 1099-MISC is the first step to accurate reporting.
Every tax form reports specific payments. That is the case for 1099-MISC vs 1099-DIV as well. Both come under the 1099 tax form umbrella but report different payments.
Form 1099-DIV is used exclusively to report dividends and distribution from stocks, mutual funds, or certain investments.
On the other hand, Form 1099-MISC reports miscellaneous income such as rent, prizes, attorney fees, royalties, etc.
Using the wrong form is not only a compliance issue but can cost you and your business up to $660 per form with no maximum limit for intentional disregard. Which means you could be paying up to a million dollars in penalties if you fail to file your informational returns correctly.
Deciding when and under which circumstances you need to file 1099-DIV or 1099-MISC depends on the type of payment that needs to be reported.
When in doubt, compare the purpose of the form. Most payers can decide quickly by matching the payment to the payment type and dollar reporting threshold on the correct form.
Note: The reporting threshold applies per payee, per calendar year. You’d need to sum up all the payments of the same type before choosing the form.
Backup Withholding
If TIN is invalid or not provided, you need to apply backup withholding and withhold 24% of the payment amount, even if the amount is below the reporting threshold. Report the withheld tax in Box 4 on 1099-DIV or 1099-MISC.
If any individual or entity received dividend (regular cash, DRIPS) or capital gain distribution in a year, that amount must be reported on 1099-DIV if it exceeds the $10 threshold or $600 for liquidation(money paid when a company shuts down).
You can also use this form to report foreign tax or federal income tax withheld under backup withholding rules, regardless of the amount.
This form is filed by financial institutions or any other entities that make dividend or distribution payments such as:
Miscellaneous payments that don’t fit into any other reportable categories will usually fall under 1099-MISC reporting requirements. This form reports rent, prizes, awards, medical and health care payments, crop insurance payouts, cash payments for fish, payments to attorney, fishing boat proceeds, and other miscellaneous payments of $600 or more ($10+ for royalties).
Similar to 1099-DIV, you can also report backup withholding if TIN was not provided or is invalid, regardless of the amount.
The form can be filed by any individual or business, including:
Dividend payments and miscellaneous income reporting done wrong cost more than time. Tax1099 gets them right the first time and help you automate the entire filing process. E-file with Tax1099
Tax1099 gets them right the first time and help you automate the entire filing process.
Collect a signed W-9 before filing
The first step in a 1099-DIV vs 1099-MISC filing process is to collect W-9 forms from every payee or vendor or freelancer. This form contains the necessary information needed to file the forms (name, TIN, address, etc).
Check the payee’s TIN with Tax1099 TIN-Match
Once you receive the form, make sure to run a TIN-match to verify the name and TIN combination with IRS data.
Track total payments
Keep record of all the payments made in a year and calculate the total amount. If the amount reaches the minimum reporting threshold, report it the correct forms.
Pick 1099-DIV or 1099-MISC and the right box
Always use 1099-DIV to report dividends and certain distributions, and Form 1099-MISC to report miscellaneous income. Make sure the amount is reported in the correct box.
Send copy to payee by Jan 31, 2026
Keeping filing deadlines 1099 2025 TY in mind streamlines filing process. You can send recipient copies of the forms to payee, freelancer, or vendor so that they can accurately prepare and file their own tax returns.
E-file by Mar 31, 2026
Let Tax1099 e-file and securely submit both 1099-DIV and 1099-MISC forms directly to the IRS and required state agencies before the March 31, 2026 deadline.
Store PDF copy and W-9 for 4 years
Keep PDF copies of both the 1099 forms and corresponding W-9s in case of any IRS audits.
Reporting cash prize on 1099-DIV
Cash prizes are always reported on 1099-MISC Box 3, and not on 1099-DIV. Box 3 on 1099-MISC is specifically for reporting prizes and awards.
Not Recognizing Lower Reporting Thresholds
Missing lower reporting thresholds like not reporting capital gain distributions or royalties if they exceed $10 in total during the year can cause compliance issues.
Skipping rent to an individual LLC
Rental payments of $600 or more made to LLCs are reported on 1099-MISC, Box 1, regardless of the entity type.
Filing Forms Late
Filing on time is an important part of tax compliance. If you fail to file 1099-MISC or 1099-DIV on time, you will have to pay penalties of up to $330 or more per form, with intentional disregard penalties reaching $660 per form.
No, 1099-DIV is only used for dividend payments above $10 in a year or any amount if federal income tax was withheld under backup withholding rules.
Yes, a single payee can receive both 1099-DIV and 1099-MISC if they received dividend payments and miscellaneous income like rent, prizes, etc., in the same year.
Rental payments to a corporation are not reported to the IRS, unless backup withholding applies.
If a payer files the wrong 1099 form, file a “CORRECTED” form with all the updated details and send a copy to the recipient within 30 days of discovering the error to reduce any potential penalties.
It’s considered best practice to keep a record of W-9s and tax forms for at least four years. Tax1099 e-file platform lets you store your tax data in case of audit or IRS scrutiny.
Complex payout structures with divided payments? High-volume miscellaneous payments? Tax1099 streamlines the process from data import to IRS submission. Sign up now
Tax1099 streamlines the process from data import to IRS submission.