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Tax time can be one of the most stressful periods of the year for some people, but with some simple help, filling out tax forms becomes much easier. One of the most confusing tax forms in the United States is form 1099-DIV, which must be used by taxpayers to report any dividends received from investments, such as stocks. The form requires a great deal of data to be inputted into its fields, but it can be easily filled out after some close reading.
Not every taxpayer is required to fill out a form 1099-DIV. In fact, most taxpayers likely will never have to deal with it, because it deals exclusively with dividends earned during a given tax year. It allows the filer to report any dividends received, income tax withheld and foreign tax paid. Correctly filling this form allows the U.S. Internal Revenue Service to get an accurate picture of the filer's income and to know if that person needs either to pay more tax or to get a tax refund.
A taxpayer is not expected to know dividend data from memory or keep his or her own records throughout the year to complete form 1099-DIV. Instead, the institution paying out the dividend, usually a stockbroker or a financial firm, is responsible for sending out a statement each year. This statement must be mailed in a timely fashion and early enough to give the recipient enough time to calculate his or her taxes before the April 15 due date. All appropriate dividend information should be on this statement, or each of the statements, if the taxpayer uses more than one broker.
The form itself is laid out in a simple manner that can be filled out quickly. Form 1099-DIV asks for the filer's personal information in the columns on its left side. Data such as the individual's name, address, social security number and account number must all be filled out accurately. The right side of the sheet requires dividend information. This section normally is the most difficult to fill out because the instructions request many dividend details that sound similar.
One of the more challenging aspects of form 1099-DIV is reporting a qualified dividend, because they are low dividends that qualify for lower tax rates. Other boxes request information from real estate ventures or mutual fund dividends. One box requests foreign taxes paid and normally refers to any money earned from foreign mutual funds. There are a variety of other boxes, but all of them should correspond to statements sent out from the organizations that pay the dividends.
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