Reporting Dividends on Your Taxes

It’s tax time! If you have earned money from dividends in the past tax year, you will need to report that income. The IRS expects that you will report all of your income on your tax return, and dividend income is no exception. Reporting your dividends is fairly straightforward.

Form 1040, Line 9

There is a space for you to fill in your dividend earnings on the front side of your Form 1040, on Line 9. This income will affect your adjusted gross income (AGI). It’s important to keep track of this income. Luckily, it should be reported to you on the 1099-DIV statements you should receive from each company reporting dividends.

As you report your dividends, you will notice that there is a Line 9a and a Line 9b. Your ordinary dividends belong on Line 9a. It is important to note that all dividends are considered “ordinary.” Line 9b is for qualified dividends. These dividends are those that are taxed at the long-term capital gains rate, rather than being taxed as regular income. This can help you lower your tax liability.

You can figure out whether or not your dividends are qualified by checking your 1099-DIV. Ordinary dividends are listed in box 1a, and qualified dividends are listed in box 1b. Add up the totals from each of your 1099-DIV forms and put the totals in the appropriate lines on your tax form.

Schedule B

Realize, too, that you will have to file a Schedule B with your Form 1040 if you receive more than $1,500 in dividend income. Once you reach this point, you will need to detail your dividend earnings.

You should note that your interest earnings are also reported on Schedule B if they exceed $1,500. You don not total interest earnings with dividend earnings. It is important to make this distinction. You only have to fill out the Schedule B if one or the other is at least $1,500. This means that if you have $1,400 in dividend earnings and $350 in interest earnings, you will have no need to file a Schedule B. The total of the two may exceed $1,500, but since you don’t have to add them together, and neither of them reach the threshold, there is no reason to file a Schedule B.

As always, if you have questions about what you should file, and how you should report your earnings, it is a good idea to talk to a tax professional.