How Are Interest & Dividends Taxed?

You are taxed on interest or dividends paid or credited to you during the year. The amounts reportable on your tax return will usually be shown on Form 1099-INT or Form 1099-DIV you receive from the payor during the year. However, this income is reportable even if you did not receive such a document.

If you are having interest or dividends reinvested in the account, these are still taxable as credited to you, even though you did not receive the money. If you are holding US Savings Bonds, see information in the Form 1040 booklet on how to report the interest.

If your interest or dividends exceed $400 for the year, you cannot file Form 1040EZ. You must file Form 1040A and attach Schedule 1, or Form 1040 and attach Schedule B. Always list the payor of each item exactly the way it appears on the statement you received. For example, if your GM stock is held in "street name", the correct payor to list would be your brokerage, not GM.

If you have interest or dividends from municipal obligations or funds, these are reportable on Form 1040, even though they are not taxable. See the Form 1040 instructions.

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We do not offer legal advice. All information provided on this website is for informational purposes only and is not a substitute for proper legal advice. If you have legal questions, we recommend that you seek the advice of legal professionals.

Tax Disclaimer: To ensure compliance with IRS Rules, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.