Dividends

DIVIDENDS
Dividends are paid to shareholders (people who own stock) of corporations. They represent the shareholder's portion of the corporation's profits. In this section you'll learn about the various kinds of dividends shareholder may receive, and their tax treatment.

Note: Certain distributions commonly referred to as dividends are actually interest. These so-called "dividends" must be reported as interest. The most common example is "dividends" paid by credit unions.

Payers of dividends of $10 or more to any one person during the year required to report such payments to the IRS and furnish the recipient with a statement of total dividends receives for the tax year. Form 1099-DIV

The three most common types of distributions are:

1. Ordinary dividends (Box 1);
2. Capital gain distributions (Box 2a); and
3. Nontaxable distributions (Box 3).