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 IBM stock is held in "street name", the correct payor to list would be your brokerage, not IBM.

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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