Guide to Form 1099-DIV

Received when you earn dividends from stocks or mutual funds. The tax treatment depends heavily on the type of dividend.

Ordinary vs. Qualified Dividends

Box 1a: Total ordinary dividends

These are taxed at your normal income tax rate (determined by your tax bracket). Report this on Line 3b of your 1040.

Box 1b: Qualified dividends

These are a subset of Box 1a. Because the stock was held for a specific period, these are taxed at the lower capital gains rate (0%, 15%, or 20%). Report this on Line 3a.

Warning: Box 1b is *included* in Box 1a. Do not add them together. Line 3b will be your total dividends, and Line 3a simply tells the IRS that a portion of that total should be taxed at a lower rate.