Taxes on Ordinary and Qualified Dividends

by | Nov 15, 2018 | Top Accounting Tutorials | 0 comments

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Taxes on Ordinary and Qualified Dividends

Not sure how to handle your dividend information on your tax return? Let efile.com help once you answer a few simple questions, we will select the correct form(s) for you and assist you with filling them out. 

Read on for more information on the different types of dividends. 

The most common dividends are the distributions of profit that a corporation pays to its shareholders. Dividends are most frequently distributed as cash, but they may also come in the form of stocks, stock options, debt payments, property, or even services.

Payments from mutual funds may also be dividends. A mutual fund is an investment company that buys and sells assets to earn profit for itself and its investors. The portions of the profit passed on to investors are dividends, unless the assets were held long enough for the profits to be considered capital gains.

Partnerships and S-corporations may also pay out dividends. Some distributions from trusts and estates can also be considered dividends.

There are two types of dividends:

Ordinary dividends and qualified dividends each have different tax rates:

All dividends are taxable and all dividend income must be reported. If you received dividends totaling $10 or more from any entity, then you should receive a Form 1099-DIV stating the amount you received. If you received dividends from a trust, estate, or S-corporation, then you should also receive a Schedule K-1, which will tell you how much of the dividends are taxable to you.

If you don’t receive either form, but you did receive dividends in any amount, then you should still report your dividend income on your tax return.

Dividends reinvested to purchase stock are still taxable. 

Dividends are reported directly on Form 1040. If the ordinary dividends you received total more than $1,500, or if you received dividends that belong to someone else because you are a nominee, then you must also file Schedule B.

Reporting dividend income is easy when you prepare your return on efile.com. The online software will select the correct tax forms for you and make sure that they are filled out correctly.

Information on Capital Gains Taxes and Capital Loss Deductions

Use our Free Tax Tools including our Tax Calculator, to estimate your taxes or determine eligibility for credits.

Research & References of Taxes on Ordinary and Qualified Dividends|A&C Accounting And Tax Services
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