The short answer

What it reportsDistributions, such as dividends, capital gain distributions, or nontaxable distributions, that were paid on stock and liquidation distributions.
Amounts to report$10 or more, except $600 or more for liquidations
To the recipientJanuary 31
To the IRS, on paperFebruary 28
To the IRS, electronicallyMarch 31

If one arrives

Ordinary and qualified dividends are taxed differently and the form separates them. Capital gain distributions reach Schedule D.

The form is how a payer tells the IRS what it paid. Its absence is not permission — income you received is reportable whether or not a form covers it, and a threshold decides only who must file, never what you owe.

What it reports

A dividend is, in Topic 404's words, a distribution "of earnings and profits a corporation may pay you if you own stock in that corporation." Form 1099-DIV reports those payments, and other distributions on shares, for each payer that paid you $10 or more during the year. Most are paid in cash, but a dividend can also be paid in stock or other property.

The form separates the payments by how they are taxed, and the separation matters more than the total. The payer "is required to correctly identify which of your ordinary dividends are also qualified dividends."

The boxes a reader meets

Box What it holds
1a Total ordinary dividends, including reinvested dividends
1b The part of 1a that is qualified dividends
2a Total capital gain distributions
3 Nondividend distributions: a return of your investment
4 Federal income tax withheld under backup withholding
9, 10 Cash and noncash liquidation distributions

Not every box on the form is covered here.

Three kinds of payment, three treatments

Dividends, box 1a. Ordinary income, except the part in box 1b, which is taxed at the lower rates that apply to long-term capital gains. Box 1b is a part of box 1a, so the two are never added together.

Capital gain distributions, box 2a. These come from funds that pass on their own gains from selling investments, and they are "always reported as long-term capital gains," however long you held the fund.

Nondividend distributions, box 3. Not income when received. They reduce your basis in the shares, which makes the gain larger when you sell. Once the basis is used up, anything more is a capital gain, reported on Form 8949 and Schedule D.

A liquidation distribution, in boxes 9 and 10, is also a return of your investment. If the total you receive is less than your basis, you may have a capital loss, "but only after you have received the final distribution."

If you work for a company you own shares in

Topic 404 has a warning for owners who also provide services to their own corporation: a shareholder "may be deemed to receive a dividend if the corporation pays the shareholder service-provider in excess of what it would pay a third party for the same services." The same applies when the corporation pays a shareholder's personal debt, or lets a shareholder use its property without paying for it. Pay for your work and a return on your shares are taxed differently, and the IRS looks at the substance.

Where it goes on your return

Ordinary and qualified dividends go on Form 1040, with Schedule B needed once taxable ordinary dividends pass $1,500. Capital gain distributions go on Schedule D, or directly on Form 1040 if you have no other capital gains to report. If you give the payer your correct taxpayer identification number, nothing is withheld; if you do not, backup withholding at 24% applies. See backup withholding.

Common questions

What is the difference between ordinary and qualified dividends?
Box 1a is all ordinary dividends; box 1b is the part of them that qualifies for the lower rates. Topic 404: "Whereas ordinary dividends are included in ordinary income, qualified dividends are those dividends that qualify to be taxed at lower capital gain rates." Box 1b is inside box 1a, not added to it.
My dividends were reinvested and I never received cash. Are they taxable?
Yes. The payer is told to "Include reinvested dividends" in box 1a. The reinvested amount also becomes part of your basis in the new shares, which matters when you sell them.
What is a nondividend distribution in box 3?
A return of your own investment rather than a share of profits. Topic 404: it "reduces the adjusted cost basis of your stock." It is not taxed when you receive it, until your basis reaches zero; after that, "any further nondividend distribution is a taxable capital gain."
Where do capital gain distributions in box 2a go?
They are long-term capital gains whatever your holding period: "Capital gain distributions are always reported as long-term capital gains."
Do I need Schedule B?
Only above a threshold. Topic 404: "If you receive over $1,500 of taxable ordinary dividends, you must report these dividends on Schedule B."

This page is for educational purposes only and does not constitute tax, legal, or financial advice. It covers United States federal reporting. Consult a qualified tax professional about your situation.

Official sources