Form 1099-DIV: A Simple 2025 Guide to Reporting Dividends

What is Form 1099-DIV?

Form 1099-DIV is an IRS form that reports dividend and capital-gain distributions paid to individuals in a year. It is filed by financial institutions like banks, corporations, mutual funds, and REITs for payments that exceed the 1099-DIV $10 threshold or $600 or more for a liquidation. It also reports foreign tax or federal income tax withheld under backup withholding rules, regardless of the amount.

Form 1099-DIV 2025: Who Files It?

Any entity that makes dividend or distribution payments that meets the IRS reporting threshold during the tax year must file 1099-DIV, including:

• Banks
• Corporations that pay dividends
• Mutual funds
• Real Estate Investment Trusts (REITs)
• Brokerages
• Financial institutions
• Investment firms or trusts

Exceptions to 1099-DIV Reporting:

• Recipient corporations & tax-exempt organizations
• IRAs, HSAs, or Archer MSAs
• Government agencies
• Registered securities or commodities dealers
• Life insurance or employee stock ownership plans
• Credit unions, banks, savings & loans, and other institutions that label interest as “dividends” (reported on Form 1099-INT)
• Substitute payments in lieu of dividends from loaned securities (reported on Form 1099-MISC)

Deadlines for 1099-DIV Reporting

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1099-DIV Form Tour: Box-by-Box Walkthrough

Box 1a: Total Ordinary Dividends
Total amount of ordinary dividends received, including those reinvested and from money market funds are reported in this box.

Box 1b: Qualified Dividends

Portion of the dividends reported in Box 1a that qualifies for lower capital gains rates need to be reported on qualified dividends Box 1b.

Box 2a: Total Capital-Gain Distributions

Add the total amount from boxes 2b to 2f and report it on capital gain distribution Box 2a.

Box 2b–2f: Capital Gains

Report gains from selling certain depreciated real estate, sale of qualified small business stock, sale of collectibles like art, coins, or antiques, dividends related to U.S. real property interests (USRPI) held by foreigners, and distributions from U.S. property owned by foreign investors in these boxes.

Box 3: Non-Dividend Distributions

Report distribution from returns of the original investment (not earnings), which reduces the investment cost basis.

Box 4: Backup Withholding

Amount withheld due to invalid or missing TIN must be reported on backup withholding Box 4.

Box 5: Section 199A Dividends

Qualified REIT or RIC dividends that are eligible for a 20% deduction under section 199A are mentioned in Box 5.

Box 6: Investment Expenses

Share of expenses from a fund that isn’t publicly traded needs to be reported in this particular box.

Box 7: Foreign Tax Paid

Foreign tax paid Box 7 reports foreign taxes paid on dividends or distributions.

Box 8: Foreign Country or U.S. Possession

Name of the country the foreign tax in Box 7 was paid to has to be reported on liquidating distribution Box 8.

Box 9 – 10: Cash/Liquidating Distributions

Report any cash and non-cash payouts received from a company that is shutting down.

Box 11. FATCA Filing Requirement

Check this box if you filed this form under FATCA filing rules.

Box 12: Exempt-Interest Dividends

Dividends from municipal bonds that are generally tax-exempt are reported here.

Box 13: Specified Private Activity Bond Interest Dividends

Report the portion of tax-exempt dividends that are subject to the AMT (Alternative Minimum Tax).

Boxes 14–16: State Information

Mention the state name, state ID, and the withheld amount, if state tax was withheld.

Ordinary vs. Qualified Dividends Reporting on 1099-DIV

In order for you to file 1099-DIV, understanding ordinary vs qualified dividends 1099 reporting is important.

Ordinary Dividends are payments (cash, shares of stock, property, or assets) made to an individual or entity because they own stock in a company. It’s a profit-sharing arrangement. It is taxable and is reported to the IRS on 1099-DIV Box 1a.

Qualified Dividends, on the other hand, are a portion of the ordinary dividends that is taxed at a lower rate and meets two main rules-

• Paid by a U.S. based corporation, foreign corporation, or a corporation with stock actively being traded on U.S markets.
• Has a minimum holding period of more than 60 days during a 121-day window that starts 60 days before the ex-dividend date.

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Special 1099-DIV Reporting Situations

Foreign tax in Box 7

Foreign taxes paid on dividends reported on Box 7 1099-DIV helps taxpayers claim foreign tax credit using Form 1116 or get an itemized deduction on Schedule A.

Liquidating distributions in Box 9

Box 9 on Form 1099-DIV reports liquidating distributions. These payments are treated as a return of capital and reduces the shareholder’s cost basis in the stock. And once the basis is reduced to zero, any additional amount is treated as a capital gain and reported on Schedule D.

REIT Section 199A dividends in Box 5

Box 5 reports Section 199A dividends, which qualify for the Qualified Business Income (QBI) deduction. Taxpayers can claim a deduction equal to 20% of these dividends on Form 8995 or 8995-A.

DRIPs (Dividend Reinvestment Plan)

Even if there is no cash, reinvested dividends through DRIPs must be reported on Form 1099-DIV just like cash dividends.

Multiple forms

A payee can receive both Form 1099-DIV and 1099-INT because dividends and interest are different income types and reported in different forms.

When & How to Use Schedule B (Form 1040)

Schedule B is an individual tax return form that provides a breakdown of all the interest and ordinary dividends on an individual tax return.

A Schedule B has to be filed if a taxpayer receives more than $1,500 in total ordinary dividends (reported in Box 1a of Form 1099-DIV), or if they have to report “nominee dividends” or receive dividends on behalf of someone else, or have foreign financial accounts.

If the total ordinary dividends are $1,500 or less, it can be reported directly on Form 1040 without the need for a separate Schedule B.

How to E-File 1099-DIV in Three Steps With Tax1099

E-file 1099 div step-by-step using the following steps:

• Upload Data:Start by importing tax filing data into Tax1099 via CSV or Excel upload or accounting-software export.
• Validate Data: Verify the taxpayer data using our real-time TIN-Match which verified name and TIN combination with IRS records. This gives you enough time to fix any incorrect issue before submission.
• Submit & E-File: Once all the information is verified, transmit 1099-DIV directly to the IRS via Tax1099 platform. You can also e-deliver copies of the form to recipients using our eDelivery portal.

Common Mistakes & Fast Fixes When Filing 1099-DIV

Mis-labelling qualified vs. ordinary dividends

Qualified dividends and ordinary dividends are reported on different boxes on 1099-DIV. Box 1b and Box 1a respectively. Mislabelling either could lead to underreported tax liability or IRS notices.

Always confirm the holding period and issuer country before marking a dividend as qualified.

Forgetting to file when backup withholding was taken

Backup withholding is triggered when TIN is invalid or not provided.

Even if the dividend amount is just $1, if the filing triggers backup withholding rules, you will have to withhold the amount and report it on backup withholding box 4.

Sending 1099-DIV for IRA dividends

IRS dividends are not reported on 1099-DIV. Issuing the from for IRS dividends can cause confusion for recipients.

If a 1099-DIV was mistakenly sent for IRA dividends, you must remove the reported amounts and file a ‘CORRECTED’ form with the correct details.

Wrong amounts or TINs

Any errors including entering miscalculated dividend amount or TIN can trigger penalties and backup withholding if not corrected immediately.

Promptly filing a ‘CORRECTED’ copy with the correct numbers and amount will reduce the risk of penalties.

Missing state boxes 12-14 when state withholding applies

Boxes 12 to 14 are used only if state income was withheld from divided payments. If you fail to report state-level details, it could lead to compliance issue with state agencies and trigger audits.

Coordinate with payroll or HR systems to ensure the state-level filing data is properly captured, especially for multistate recipients or firms operating across state lines.

Real-Life Reporting Situations While Filing 1099-DIV

• If a taxpayer receives a $30 in ordinary dividends from a mutual fund or ETF invested in U.S. stocks, it has to be reported on Box 1a of 1099-DIV since the amount meets the 1099-DIV $10 threshold.
• If a taxpayer receives $1,200 in qualified dividends from a U.S. company whose stock they own, it needs to be reported on Box 1a and 1b of 1099-DIV. Box 1a shows the total dividend amount and Box 1b shows the portion that is qualified.
• If $2,500 capital-gain distribution from a mutual fund was distributed to a shareholder, the amount must be reported on Box 2a, 1099-DIV.
• If a shareholder received a $650 liquidating distribution from a company shutting down, the amount must be reported on Box 9, 1099-DIV.
• If an individual received $500 in dividends from a foreign stock, and $75 was withheld as foreign tax, the total dividend amount is reported on Box 1a. The foreign tax paid has to be reported on Box 7 of 1099-DIV.

FAQs

1. Do I need to send a 1099-DIV for dividends under $10?

Form 1099-DIV is required if total dividends paid to a recipient reach $10 or more in a year. However, investors must still report all dividend income on their tax returns.

2. Can one payee get both 1099-DIV and 1099-INT?

Yes, since dividend income and interest income are reported on separate forms,1099-DIV and 1099-INT respectively, a payee can get both forms.

3. What triggers backup withholding in Box 4?

Backup withholding is triggered in Box 4 if there is a missing or incorrect TIN.

4. Are DRIP (dividend-reinvestment) amounts reportable?

Yes, DRIP or Dividend Reinvestment Plan are considered taxable income and must be reported on Form 1099-DIV.

5. How do I correct a wrong amount after sending 1099-DIV to the IRS?

To correct a wrong amount, all you need to do is send a new 1099-DIV marked “CORRECTED,” make the corrections, and retransmit to the IRS. You also need to resend copies to recipients.

6. Do IRA dividends need a 1099-DIV?

No, IRA Dividends are not reported on Form 1099-DIV.

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