Mistake 1:<\/strong><\/p>\nThe IRS is strict about their reporting requirements and if you file for dividend payments that are less than $10 with no tax withheld, the IRS may flag it for audits.<\/p>\n
Solution<\/strong>: Void the previous filing by submitting a \u2018CORRECTED\u2019 1099-DIV form and show \u201c0\u201d in the boxes.<\/p>\nMistake 2:<\/strong><\/p>\nDividend payments and interest payments are reported on completely different forms. 1099-DIV is used for dividend payments while interest payments go on Form 1099-INT.<\/p>\n
Solution<\/strong>: File a \u2018CORRECTED\u2019 1099-DIV with the correct payment amount. There is no need to refile the incorrect 1099-INT, but make sure the corrected 1099-DIV is also sent to the recipient.<\/p>\nMistake 3:<\/strong><\/p>\nIncorrect or missing TIN triggers the 24% backup withholding rule. If you don\u2019t withhold, the IRS will send a notice and charge penalties plus interest.<\/p>\n
Solution<\/strong>: Pay the missing withholding tax using Form 945 and send B-Notice to the recipient.<\/p>\nMistake 4:<\/strong><\/p>\nForeign tax withheld should always be reported in Boxes 6 and 7 of 1099-DIV. It is required by the recipient to claim foreign tax credit or deduction.<\/p>\n
Solution<\/strong>: File a \u2018CORRECTED\u2019 1099-DIV with the correct foreign tax paid amount (Box 6) and the name of the foreign country (Box 7).<\/p>\nReal-World Examples for 1099-DIV Payers<\/h2>\n\n- If an investor receives a $25 cash dividend from your company\u2019s stock and since this is above the IRS reporting threshold of $10, you must issue a Form 1099-DIV. On the form, enter the total amount ($25) in Box 1a.<\/li>\n
- If you send a dividend payment of $9 to a recipient, normally, since it\u2019s under $10, you wouldn\u2019t need to file a 1099-DIV. But in this case, since the individual didn\u2019t provide a valid TIN, you are required to withhold 24% backup tax and report the $9 in Box 1a and $3 (withheld amount) in Box 4.<\/li>\n
- If your company distribute $700 from its profits to shareholders as a return of capital, instead of as a dividend, you need to report it in Box 3 of 1099-DIV.<\/li>\n
- If a person signed up for a DRIP plan with your company and received $450 in dividend payment, it needs to be reported on Box 1a of 1099-DIV.<\/li>\n
- If your fund invested in a company in Canada, and you distributed a $50 foreign dividend, under Canadian tax law, 12% tax has to be withheld. Report the $50 in Box 1a and, $6 withheld tax in Box 6, and country name in Box 7.<\/li>\n
- If you made a dividend payment to a C-Corporation, you do not need to report it on 1099-DIV. C-Corps generally don\u2019t need to receive 1099-DIV.<\/li>\n<\/ul>\n
FAQs<\/h2>\n1. I\u2019ve mailed investor copies of Form 1099-DIV on Feb 2, what are the next steps?<\/h5>\n
Since you missed the recipient copy distribution deadline (Jan 31), you can expect a small fee for late furnishing.<\/p>\n
2. Can the Jan 31 recipient copy distribution deadline be extended?<\/h5>\n
No, you cannot request an extension for furnishing copies to investors.<\/p>\n
3. Do S-Corps get a 1099-DIV form?<\/h5>\n
S-corps get a 1099-DIV form only when dividend payments are made that need to be reported as dividends. Otherwise, they do not generally receive a 1099-DIV.<\/p>\n
4. The dividend numbers changed after the year-end, should I file a 1099-DIV again?<\/h5>\n
Yes, you can send a CORRECTED 1099-DIV with the updated information. This new form will void the original form.<\/p>\n
5. Is it okay to send an email for 1099-DIV investor copies?<\/h5>\n
Yes, but you can send recipient copies of 1099-DIV only after you receive the investor\u2019s consent.<\/p>\n
6. How long do I have to keep 1099-DIV tax files?<\/h5>\n
Keep records of all 1099-DIV filings and related documents for at least four years.<\/p>\n
Filing 1099-DIV with Tax1099<\/h2>\n
An IRS authorized e-filing platform, Tax1099, offers an easier and faster way to e-file 1099s, W-2s, 1098s, and ACA forms<\/a>.
\nUpload all your tax form filing data in one go.<\/p>\n\n- Use real-time TIN Match, calculate totals, and apply state-specific rules.<\/li>\n
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Bulk-upload your 1099-DIV forms and finish filing in minutes, only with Tax1099<\/strong>.<\/p>\n