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File back tax returns online 8. File back tax returns online   Dividends and Other Distributions Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationDividends not reported on Form 1099-DIV. File back tax returns online Reporting tax withheld. File back tax returns online Nominees. File back tax returns online Ordinary DividendsQualified Dividends Dividends Used to Buy More Stock Money Market Funds Capital Gain DistributionsBasis adjustment. File back tax returns online Nondividend DistributionsLiquidating Distributions Distributions of Stock and Stock Rights Other DistributionsInformation reporting requirement. File back tax returns online Alternative minimum tax treatment. File back tax returns online How To Report Dividend IncomeInvestment interest deducted. File back tax returns online Reminder Foreign-source income. File back tax returns online  If you are a U. File back tax returns online S. File back tax returns online citizen with dividend income from sources outside the United States (foreign-source income), you must report that income on your tax return unless it is exempt by U. File back tax returns online S. File back tax returns online law. File back tax returns online This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. File back tax returns online Introduction This chapter discusses the tax treatment of: Ordinary dividends, Capital gain distributions, Nondividend distributions, and Other distributions you may receive from a corporation or a mutual fund. File back tax returns online This chapter also explains how to report dividend income on your tax return. File back tax returns online Dividends are distributions of money, stock, or other property paid to you by a corporation or by a mutual fund. File back tax returns online You also may receive dividends through a partnership, an estate, a trust, or an association that is taxed as a corporation. File back tax returns online However, some amounts you receive that are called dividends are actually interest income. File back tax returns online (See Dividends that are actually interest under Taxable Interest in chapter 7. File back tax returns online ) Most distributions are paid in cash (or check). File back tax returns online However, distributions can consist of more stock, stock rights, other property, or services. File back tax returns online Useful Items - You may want to see: Publication 514 Foreign Tax Credit for Individuals 550 Investment Income and Expenses Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends General Information This section discusses general rules for dividend income. File back tax returns online Tax on unearned income of certain children. File back tax returns online   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. File back tax returns online If it is, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. File back tax returns online If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. File back tax returns online    Some parents can choose to include the child's interest and dividends on the parent's return if certain requirements are met. File back tax returns online Use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. File back tax returns online   For more information about the tax on unearned income of children and the parents' election, see chapter 31. File back tax returns online Beneficiary of an estate or trust. File back tax returns online    Dividends and other distributions you receive as a beneficiary of an estate or trust are generally taxable income. File back tax returns online You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. File back tax returns online , from the fiduciary. File back tax returns online Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. File back tax returns online Social security number (SSN) or individual taxpayer identification number (ITIN). File back tax returns online    You must give your SSN or ITIN to any person required by federal tax law to make a return, statement, or other document that relates to you. File back tax returns online This includes payers of dividends. File back tax returns online If you do not give your SSN or ITIN to the payer of dividends, you may have to pay a penalty. File back tax returns online For more information on SSNs and ITINs, see Social Security Number (SSN) in chapter 1. File back tax returns online Backup withholding. File back tax returns online   Your dividend income is generally not subject to regular withholding. File back tax returns online However, it may be subject to backup withholding to ensure that income tax is collected on the income. File back tax returns online Under backup withholding, the payer of dividends must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. File back tax returns online   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. File back tax returns online For more information, see Backup Withholding in chapter 4. File back tax returns online Stock certificate in two or more names. File back tax returns online   If two or more persons hold stock as joint tenants, tenants by the entirety, or tenants in common, each person's share of any dividends from the stock is determined by local law. File back tax returns online Form 1099-DIV. File back tax returns online   Most corporations and mutual funds use Form 1099-DIV, Dividends and Distributions, to show you the distributions you received from them during the year. File back tax returns online Keep this form with your records. File back tax returns online You do not have to attach it to your tax return. File back tax returns online Dividends not reported on Form 1099-DIV. File back tax returns online   Even if you do not receive Form 1099-DIV, you must still report all your taxable dividend income. File back tax returns online For example, you may receive distributive shares of dividends from partnerships or S corporations. File back tax returns online These dividends are reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. File back tax returns online , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. File back tax returns online Reporting tax withheld. File back tax returns online   If tax is withheld from your dividend income, the payer must give you a Form 1099-DIV that indicates the amount withheld. File back tax returns online Nominees. File back tax returns online   If someone receives distributions as a nominee for you, that person should give you a Form 1099-DIV, which will show distributions received on your behalf. File back tax returns online Form 1099-MISC. File back tax returns online   Certain substitute payments in lieu of dividends or tax-exempt interest received by a broker on your behalf must be reported to you on Form 1099-MISC, Miscellaneous Income, or a similar statement. File back tax returns online See Reporting Substitute Payments under Short Sales in chapter 4 of Publication 550 for more information about reporting these payments. File back tax returns online Incorrect amount shown on a Form 1099. File back tax returns online   If you receive a Form 1099 that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. File back tax returns online The new Form 1099 you receive will be marked “Corrected. File back tax returns online ” Dividends on stock sold. File back tax returns online   If stock is sold, exchanged, or otherwise disposed of after a dividend is declared but before it is paid, the owner of record (usually the payee shown on the dividend check) must include the dividend in income. File back tax returns online Dividends received in January. File back tax returns online   If a mutual fund (or other regulated investment company) or real estate investment trust (REIT) declares a dividend (including any exempt-interest dividend or capital gain distribution) in October, November, or December, payable to shareholders of record on a date in one of those months but actually pays the dividend during January of the next calendar year, you are considered to have received the dividend on December 31. File back tax returns online You report the dividend in the year it was declared. File back tax returns online Ordinary Dividends Ordinary (taxable) dividends are the most common type of distribution from a corporation or a mutual fund. File back tax returns online They are paid out of earnings and profits and are ordinary income to you. File back tax returns online This means they are not capital gains. File back tax returns online You can assume that any dividend you receive on common or preferred stock is an ordinary dividend unless the paying corporation or mutual fund tells you otherwise. File back tax returns online Ordinary dividends will be shown in box 1a of the Form 1099-DIV you receive. File back tax returns online Qualified Dividends Qualified dividends are the ordinary dividends subject to the same 0%, 15%, or 20% maximum tax rate that applies to net capital gain. File back tax returns online They should be shown in box 1b of the Form 1099-DIV you receive. File back tax returns online The maximum rate of tax on qualified dividends is: 0% on any amount that otherwise would be taxed at a 10% or 15% rate. File back tax returns online 15% on any amount that otherwise would be taxed at rates greater than 15% but less than 39. File back tax returns online 6%. File back tax returns online 20% on any amount that otherwise would be taxed at a 39. File back tax returns online 6% rate. File back tax returns online To qualify for the maximum rate, all of the following requirements must be met. File back tax returns online The dividends must have been paid by a U. File back tax returns online S. File back tax returns online corporation or a qualified foreign corporation. File back tax returns online (See Qualified foreign corporation , later. File back tax returns online ) The dividends are not of the type listed later under Dividends that are not qualified dividends . File back tax returns online You meet the holding period (discussed next). File back tax returns online Holding period. File back tax returns online   You must have held the stock for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. File back tax returns online The ex-dividend date is the first date following the declaration of a dividend on which the buyer of a stock is not entitled to receive the next dividend payment. File back tax returns online Instead, the seller will get the dividend. File back tax returns online   When counting the number of days you held the stock, include the day you disposed of the stock, but not the day you acquired it. File back tax returns online See the examples later. File back tax returns online Exception for preferred stock. File back tax returns online   In the case of preferred stock, you must have held the stock more than 90 days during the 181-day period that begins 90 days before the ex-dividend date if the dividends are due to periods totaling more than 366 days. File back tax returns online If the preferred dividends are due to periods totaling less than 367 days, the holding period in the previous paragraph applies. File back tax returns online Example 1. File back tax returns online You bought 5,000 shares of XYZ Corp. File back tax returns online common stock on July 9, 2013. File back tax returns online XYZ Corp. File back tax returns online paid a cash dividend of 10 cents per share. File back tax returns online The ex-dividend date was July 16, 2013. File back tax returns online Your Form 1099-DIV from XYZ Corp. File back tax returns online shows $500 in box 1a (ordinary dividends) and in box 1b (qualified dividends). File back tax returns online However, you sold the 5,000 shares on August 12, 2013. File back tax returns online You held your shares of XYZ Corp. File back tax returns online for only 34 days of the 121-day period (from July 10, 2013, through August 12, 2013). File back tax returns online The 121-day period began on May 17, 2013 (60 days before the ex-dividend date), and ended on September 14, 2013. File back tax returns online You have no qualified dividends from XYZ Corp. File back tax returns online because you held the XYZ stock for less than 61 days. File back tax returns online Example 2. File back tax returns online Assume the same facts as in Example 1 except that you bought the stock on July 15, 2013 (the day before the ex-dividend date), and you sold the stock on September 16, 2013. File back tax returns online You held the stock for 63 days (from July 16, 2013, through September 16, 2013). File back tax returns online The $500 of qualified dividends shown in box 1b of your Form 1099-DIV are all qualified dividends because you held the stock for 61 days of the 121-day period (from July 16, 2013, through September 14, 2013). File back tax returns online Example 3. File back tax returns online You bought 10,000 shares of ABC Mutual Fund common stock on July 9, 2013. File back tax returns online ABC Mutual Fund paid a cash dividend of 10 cents a share. File back tax returns online The ex-dividend date was July 16, 2013. File back tax returns online The ABC Mutual Fund advises you that the portion of the dividend eligible to be treated as qualified dividends equals 2 cents per share. File back tax returns online Your Form 1099-DIV from ABC Mutual Fund shows total ordinary dividends of $1,000 and qualified dividends of $200. File back tax returns online However, you sold the 10,000 shares on August 12, 2013. File back tax returns online You have no qualified dividends from ABC Mutual Fund because you held the ABC Mutual Fund stock for less than 61 days. File back tax returns online Holding period reduced where risk of loss is diminished. File back tax returns online   When determining whether you met the minimum holding period discussed earlier, you cannot count any day during which you meet any of the following conditions. File back tax returns online You had an option to sell, were under a contractual obligation to sell, or had made (and not closed) a short sale of substantially identical stock or securities. File back tax returns online You were grantor (writer) of an option to buy substantially identical stock or securities. File back tax returns online Your risk of loss is diminished by holding one or more other positions in substantially similar or related property. File back tax returns online   For information about how to apply condition (3), see Regulations section 1. File back tax returns online 246-5. File back tax returns online Qualified foreign corporation. File back tax returns online   A foreign corporation is a qualified foreign corporation if it meets any of the following conditions. File back tax returns online The corporation is incorporated in a U. File back tax returns online S. File back tax returns online possession. File back tax returns online The corporation is eligible for the benefits of a comprehensive income tax treaty with the United States that the Treasury Department determines is satisfactory for this purpose and that includes an exchange of information program. File back tax returns online For a list of those treaties, see Table 8-1. File back tax returns online The corporation does not meet (1) or (2) above, but the stock for which the dividend is paid is readily tradable on an established securities market in the United States. File back tax returns online See Readily tradable stock , later. File back tax returns online Exception. File back tax returns online   A corporation is not a qualified foreign corporation if it is a passive foreign investment company during its tax year in which the dividends are paid or during its previous tax year. File back tax returns online Readily tradable stock. File back tax returns online   Any stock (such as common, ordinary, or preferred) or an American depositary receipt in respect of that stock is considered to satisfy requirement (3) under Qualified foreign corporation , if it is listed on a national securities exchange that is registered under section 6 of the Securities Exchange Act of 1934 or on the Nasdaq Stock Market. File back tax returns online For a list of the exchanges that meet these requirements, see www. File back tax returns online sec. File back tax returns online gov/divisions/marketreg/mrexchanges. File back tax returns online shtml. File back tax returns online Dividends that are not qualified dividends. File back tax returns online   The following dividends are not qualified dividends. File back tax returns online They are not qualified dividends even if they are shown in box 1b of Form 1099-DIV. File back tax returns online Capital gain distributions. File back tax returns online Dividends paid on deposits with mutual savings banks, cooperative banks, credit unions, U. File back tax returns online S. File back tax returns online building and loan associations, U. File back tax returns online S. File back tax returns online savings and loan associations, federal savings and loan associations, and similar financial institutions. File back tax returns online (Report these amounts as interest income. File back tax returns online ) Dividends from a corporation that is a tax-exempt organization or farmer's cooperative during the corporation's tax year in which the dividends were paid or during the corporation's previous tax year. File back tax returns online Dividends paid by a corporation on employer securities held on the date of record by an employee stock ownership plan (ESOP) maintained by that corporation. File back tax returns online Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. File back tax returns online Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. File back tax returns online Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. File back tax returns online Table 8-1. File back tax returns online Income Tax Treaties Income tax treaties the United States has with the following countries satisfy requirement (2) under Qualified foreign corporation. File back tax returns online Australia Indonesia Romania Austria Ireland Russian Bangladesh Israel Federation Barbados Italy Slovak Belgium Jamaica Republic Bulgaria Japan Slovenia Canada Kazakhstan South Africa China Korea Spain Cyprus Latvia Sri Lanka Czech Lithuania Sweden Republic Luxembourg Switzerland Denmark Malta Thailand Egypt Mexico Trinidad and Estonia Morocco Tobago Finland Netherlands Tunisia France New Zealand Turkey Germany Norway Ukraine Greece Pakistan United Hungary Philippines Kingdom Iceland Poland Venezuela India Portugal     Dividends Used to Buy More Stock The corporation in which you own stock may have a dividend reinvestment plan. File back tax returns online This plan lets you choose to use your dividends to buy (through an agent) more shares of stock in the corporation instead of receiving the dividends in cash. File back tax returns online Most mutual funds also permit shareholders to automatically reinvest distributions in more shares in the fund, instead of receiving cash. File back tax returns online If you use your dividends to buy more stock at a price equal to its fair market value, you still must report the dividends as income. File back tax returns online If you are a member of a dividend reinvestment plan that lets you buy more stock at a price less than its fair market value, you must report as dividend income the fair market value of the additional stock on the dividend payment date. File back tax returns online You also must report as dividend income any service charge subtracted from your cash dividends before the dividends are used to buy the additional stock. File back tax returns online But you may be able to deduct the service charge. File back tax returns online See chapter 28 for more information about deducting expenses of producing income. File back tax returns online In some dividend reinvestment plans, you can invest more cash to buy shares of stock at a price less than fair market value. File back tax returns online If you choose to do this, you must report as dividend income the difference between the cash you invest and the fair market value of the stock you buy. File back tax returns online When figuring this amount, use the fair market value of the stock on the dividend payment date. File back tax returns online Money Market Funds Report amounts you receive from money market funds as dividend income. File back tax returns online Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest. File back tax returns online Capital Gain Distributions Capital gain distributions (also called capital gain dividends) are paid to you or credited to your account by mutual funds (or other regulated investment companies) and real estate investment trusts (REITs). File back tax returns online They will be shown in box 2a of the Form 1099-DIV you receive from the mutual fund or REIT. File back tax returns online Report capital gain distributions as long-term capital gains, regardless of how long you owned your shares in the mutual fund or REIT. File back tax returns online Undistributed capital gains of mutual funds and REITs. File back tax returns online    Some mutual funds and REITs keep their long-term capital gains and pay tax on them. File back tax returns online You must treat your share of these gains as distributions, even though you did not actually receive them. File back tax returns online However, they are not included on Form 1099-DIV. File back tax returns online Instead, they are reported to you in box 1a of Form 2439. File back tax returns online   Report undistributed capital gains (box 1a of Form 2439) as long-term capital gains on Schedule D (Form 1040), column (h), line 11. File back tax returns online   The tax paid on these gains by the mutual fund or REIT is shown in box 2 of Form 2439. File back tax returns online You take credit for this tax by including it on Form 1040, line 71, and checking box a on that line. File back tax returns online Attach Copy B of Form 2439 to your return, and keep Copy C for your records. File back tax returns online Basis adjustment. File back tax returns online   Increase your basis in your mutual fund, or your interest in a REIT, by the difference between the gain you report and the credit you claim for the tax paid. File back tax returns online Additional information. File back tax returns online   For more information on the treatment of distributions from mutual funds, see Publication 550. File back tax returns online Nondividend Distributions A nondividend distribution is a distribution that is not paid out of the earnings and profits of a corporation or a mutual fund. File back tax returns online You should receive a Form 1099-DIV or other statement showing the nondividend distribution. File back tax returns online On Form 1099-DIV, a nondividend distribution will be shown in box 3. File back tax returns online If you do not receive such a statement, you report the distribution as an ordinary dividend. File back tax returns online Basis adjustment. File back tax returns online   A nondividend distribution reduces the basis of your stock. File back tax returns online It is not taxed until your basis in the stock is fully recovered. File back tax returns online This nontaxable portion is also called a return of capital; it is a return of your investment in the stock of the company. File back tax returns online If you buy stock in a corporation in different lots at different times, and you cannot definitely identify the shares subject to the nondividend distribution, reduce the basis of your earliest purchases first. File back tax returns online   When the basis of your stock has been reduced to zero, report any additional nondividend distribution you receive as a capital gain. File back tax returns online Whether you report it as a long-term or short-term capital gain depends on how long you have held the stock. File back tax returns online See Holding Period in chapter 14. File back tax returns online Example. File back tax returns online You bought stock in 2000 for $100. File back tax returns online In 2003, you received a nondividend distribution of $80. File back tax returns online You did not include this amount in your income, but you reduced the basis of your stock to $20. File back tax returns online You received a nondividend distribution of $30 in 2013. File back tax returns online The first $20 of this amount reduced your basis to zero. File back tax returns online You report the other $10 as a long-term capital gain for 2013. File back tax returns online You must report as a long-term capital gain any nondividend distribution you receive on this stock in later years. File back tax returns online Liquidating Distributions Liquidating distributions, sometimes called liquidating dividends, are distributions you receive during a partial or complete liquidation of a corporation. File back tax returns online These distributions are, at least in part, one form of a return of capital. File back tax returns online They may be paid in one or more installments. File back tax returns online You will receive Form 1099-DIV from the corporation showing you the amount of the liquidating distribution in box 8 or 9. File back tax returns online For more information on liquidating distributions, see chapter 1 of Publication 550. File back tax returns online Distributions of Stock and Stock Rights Distributions by a corporation of its own stock are commonly known as stock dividends. File back tax returns online Stock rights (also known as “stock options”) are distributions by a corporation of rights to acquire the corporation's stock. File back tax returns online Generally, stock dividends and stock rights are not taxable to you, and you do not report them on your return. File back tax returns online Taxable stock dividends and stock rights. File back tax returns online   Distributions of stock dividends and stock rights are taxable to you if any of the following apply. File back tax returns online You or any other shareholder have the choice to receive cash or other property instead of stock or stock rights. File back tax returns online The distribution gives cash or other property to some shareholders and an increase in the percentage interest in the corporation's assets or earnings and profits to other shareholders. File back tax returns online The distribution is in convertible preferred stock and has the same result as in (2). File back tax returns online The distribution gives preferred stock to some common stock shareholders and common stock to other common stock shareholders. File back tax returns online The distribution is on preferred stock. File back tax returns online (The distribution, however, is not taxable if it is an increase in the conversion ratio of convertible preferred stock made solely to take into account a stock dividend, stock split, or similar event that would otherwise result in reducing the conversion right. File back tax returns online )   The term “stock” includes rights to acquire stock, and the term “shareholder” includes a holder of rights or of convertible securities. File back tax returns online If you receive taxable stock dividends or stock rights, include their fair market value at the time of distribution in your income. File back tax returns online Preferred stock redeemable at a premium. File back tax returns online   If you hold preferred stock having a redemption price higher than its issue price, the difference (the redemption premium) generally is taxable as a constructive distribution of additional stock on the preferred stock. File back tax returns online For more information, see chapter 1 of Publication 550. File back tax returns online Basis. File back tax returns online   Your basis in stock or stock rights received in a taxable distribution is their fair market value when distributed. File back tax returns online If you receive stock or stock rights that are not taxable to you, see Stocks and Bonds under Basis of Investment Property in chapter 4 of Publication 550 for information on how to figure their basis. File back tax returns online Fractional shares. File back tax returns online    You may not own enough stock in a corporation to receive a full share of stock if the corporation declares a stock dividend. File back tax returns online However, with the approval of the shareholders, the corporation may set up a plan in which fractional shares are not issued but instead are sold, and the cash proceeds are given to the shareholders. File back tax returns online Any cash you receive for fractional shares under such a plan is treated as an amount realized on the sale of the fractional shares. File back tax returns online Report this transaction on Form 8949, Sales and Other Dispositions of Capital Assets. File back tax returns online Enter your gain or loss, the difference between the cash you receive and the basis of the fractional shares sold, in column (h) of Schedule D (Form 1040) in Part I or Part II, whichever is appropriate. File back tax returns online    Report these transactions on Form 8949 with the correct box checked. File back tax returns online   For more information on Form 8949 and Schedule D (Form 1040), see chapter 4 of Publication 550. File back tax returns online Also see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040). File back tax returns online Example. File back tax returns online You own one share of common stock that you bought on January 3, 2004, for $100. File back tax returns online The corporation declared a common stock dividend of 5% on June 29, 2013. File back tax returns online The fair market value of the stock at the time the stock dividend was declared was $200. File back tax returns online You were paid $10 for the fractional-share stock dividend under a plan described in the discussion above. File back tax returns online You figure your gain or loss as follows: Fair market value of old stock $200. File back tax returns online 00 Fair market value of stock dividend (cash received) +10. File back tax returns online 00 Fair market value of old stock and stock dividend $210. File back tax returns online 00 Basis (cost) of old stock after the stock dividend (($200 ÷ $210) × $100) $95. File back tax returns online 24 Basis (cost) of stock dividend (($10 ÷ $210) × $100) + 4. File back tax returns online 76 Total $100. File back tax returns online 00 Cash received $10. File back tax returns online 00 Basis (cost) of stock dividend − 4. File back tax returns online 76 Gain $5. File back tax returns online 24 Because you had held the share of stock for more than 1 year at the time the stock dividend was declared, your gain on the stock dividend is a long-term capital gain. File back tax returns online Scrip dividends. File back tax returns online   A corporation that declares a stock dividend may issue you a scrip certificate that entitles you to a fractional share. File back tax returns online The certificate is generally nontaxable when you receive it. File back tax returns online If you choose to have the corporation sell the certificate for you and give you the proceeds, your gain or loss is the difference between the proceeds and the portion of your basis in the corporation's stock allocated to the certificate. File back tax returns online   However, if you receive a scrip certificate that you can choose to redeem for cash instead of stock, the certificate is taxable when you receive it. File back tax returns online You must include its fair market value in income on the date you receive it. File back tax returns online Other Distributions You may receive any of the following distributions during the year. File back tax returns online Exempt-interest dividends. File back tax returns online   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. File back tax returns online Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. File back tax returns online Information reporting requirement. File back tax returns online   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. File back tax returns online This is an information reporting requirement and does not change the exempt-interest dividends to taxable income. File back tax returns online Alternative minimum tax treatment. File back tax returns online   Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. File back tax returns online See Alternative Minimum Tax (AMT) in chapter 30 for more information. File back tax returns online Dividends on insurance policies. File back tax returns online    Insurance policy dividends the insurer keeps and uses to pay your premiums are not taxable. File back tax returns online However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company. File back tax returns online    If dividends on an insurance contract (other than a modified endowment contract) are distributed to you, they are a partial return of the premiums you paid. File back tax returns online Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. File back tax returns online Report any taxable distributions on insurance policies on Form 1040, line 21. File back tax returns online Dividends on veterans' insurance. File back tax returns online   Dividends you receive on veterans' insurance policies are not taxable. File back tax returns online In addition, interest on dividends left with the Department of Veterans Affairs is not taxable. File back tax returns online Patronage dividends. File back tax returns online   Generally, patronage dividends you receive in money from a cooperative organization are included in your income. File back tax returns online   Do not include in your income patronage dividends you receive on: Property bought for your personal use, or Capital assets or depreciable property bought for use in your business. File back tax returns online But you must reduce the basis (cost) of the items bought. File back tax returns online If the dividend is more than the adjusted basis of the assets, you must report the excess as income. File back tax returns online   These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative. File back tax returns online Alaska Permanent Fund dividends. File back tax returns online    Do not report these amounts as dividends. File back tax returns online Instead, report these amounts on Form 1040, line 21; Form 1040A, line 13; or Form 1040EZ, line 3. File back tax returns online How To Report Dividend Income Generally, you can use either Form 1040 or Form 1040A to report your dividend income. File back tax returns online Report the total of your ordinary dividends on line 9a of Form 1040 or Form 1040A. File back tax returns online Report qualified dividends on line 9b of Form 1040 or Form 1040A. File back tax returns online If you receive capital gain distributions, you may be able to use Form 1040A or you may have to use Form 1040. File back tax returns online See Exceptions to filing Form 8949 and Schedule D (Form 1040) in chapter 16. File back tax returns online If you receive nondividend distributions required to be reported as capital gains, you must use Form 1040. File back tax returns online You cannot use Form 1040EZ if you receive any dividend income. File back tax returns online Form 1099-DIV. File back tax returns online   If you owned stock on which you received $10 or more in dividends and other distributions, you should receive a Form 1099-DIV. File back tax returns online Even if you do not receive Form 1099-DIV, you must report all your dividend income. File back tax returns online   See Form 1099-DIV for more information on how to report dividend income. File back tax returns online Form 1040A or 1040. File back tax returns online    You must complete Schedule B (Form 1040A or 1040), Part II, and attach it to your Form 1040A or 1040, if: Your ordinary dividends (Form 1099-DIV, box 1a) are more than $1,500, or You received, as a nominee, dividends that actually belong to someone else. File back tax returns online If your ordinary dividends are more than $1,500, you must also complete Schedule B (Form 1040A or 1040), Part III. File back tax returns online   List on Schedule B (Form 1040A or 1040), Part II, line 5, each payer's name and the ordinary dividends you received. File back tax returns online If your securities are held by a brokerage firm (in “street name”), list the name of the brokerage firm shown on Form 1099-DIV as the payer. File back tax returns online If your stock is held by a nominee who is the owner of record, and the nominee credited or paid you dividends on the stock, show the name of the nominee and the dividends you received or for which you were credited. File back tax returns online   Enter on line 6 the total of the amounts listed on line 5. File back tax returns online Also enter this total on line 9a of Form 1040A or 1040. File back tax returns online Qualified dividends. File back tax returns online   Report qualified dividends (Form 1099-DIV, box 1b) on line 9b of Form 1040 or Form 1040A. File back tax returns online The amount in box 1b is already included in box 1a. File back tax returns online Do not add the amount in box 1b to, or substract it from, the amount in box 1a. File back tax returns online   Do not include any of the following on line 9b. File back tax returns online Qualified dividends you received as a nominee. File back tax returns online See Nominees under How to Report Dividend Income in chapter 1 of Publication 550. File back tax returns online Dividends on stock for which you did not meet the holding period. File back tax returns online See Holding period , earlier under Qualified Dividends. File back tax returns online Dividends on any share of stock to the extent you are obligated (whether under a short sale or otherwise) to make related payments for positions in substantially similar or related property. File back tax returns online Payments in lieu of dividends, but only if you know or have reason to know the payments are not qualified dividends. File back tax returns online Payments shown in Form 1099-DIV, box 1b, from a foreign corporation to the extent you know or have reason to know the payments are not qualified dividends. File back tax returns online   If you have qualified dividends, you must figure your tax by completing the Qualified Dividends and Capital Gain Tax Worksheet in the Form 1040 or 1040A instructions or the Schedule D Tax Worksheet in the Schedule D (Form 1040) instructions, whichever applies. File back tax returns online Enter qualified dividends on line 2 of the worksheet. File back tax returns online Investment interest deducted. File back tax returns online   If you claim a deduction for investment interest, you may have to reduce the amount of your qualified dividends that are eligible for the 0%, 15%, or 20% tax rate. File back tax returns online Reduce it by the qualified dividends you choose to include in investment income when figuring the limit on your investment interest deduction. File back tax returns online This is done on the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet. File back tax returns online For more information about the limit on investment interest, see Investment expenses in chapter 23. File back tax returns online Expenses related to dividend income. File back tax returns online   You may be able to deduct expenses related to dividend income if you itemize your deductions on Schedule A (Form 1040). File back tax returns online See chapter 28 for general information about deducting expenses of producing income. File back tax returns online More information. File back tax returns online    For more information about how to report dividend income, see chapter 1 of Publication 550 or the instructions for the form you must file. File back tax returns online Prev  Up  Next   Home   More Online Publications
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Work Opportunity Tax Credit Extended

The American Taxpayer Relief Act of 2012 (ATRA) (H.R. 8) extends the Work Opportunity Tax Credit (WOTC) for hiring certain workers through Dec. 31, 2013.

The VOW to Hire Heroes Act of 2011 made changes to the Work Opportunity Tax Credit (WOTC), including adding new categories to the qualified veterans targeted group and expanding the WOTC to make a reduced credit available to tax-exempt organizations for hiring qualified veterans. The VOW Act also extended the WOTC for qualified veterans hired before Jan.1, 2013.  The other targeted group categories were not extended by the VOW Act and expired for targeted group members other than qualified veterans hired after Dec.31, 2011. 

ATRA extends the WOTC for qualified veterans hired before Jan. 1, 2014.  ATRA also extends the WOTC for targeted group members, other than qualified veterans, hired after Dec.31, 2011, and before Jan.1, 2014.     

Pre-screening and Certification Requirements

All employers must obtain certification that an individual is a member of a targeted group, before the employer may claim the WOTC. The process for certifying the veterans for this credit is the same for all employers. To obtain certification, employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit. 

Normally, an eligible employer must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their respective state workforce agency within 28 days after the eligible worker begins work. However, as discussed below, the IRS has provided special transition rules for the recent legislative changes. 

Special Transition Rules:

Under the special transition rules, an employer who hires a member of a targeted group, other than a qualified veteran, after Dec.31, 2011, and on or before March 31, 2013, will be considered to have timely filed Form 8850 if it submits the completed form to the respective state workforce agency by April 29, 2013. An employer who hires a veteran after Dec. 31, 2012, and on or before March 31, 2013, will be considered to have timely filed Form 8850 if it submits the completed form to the respective state workforce agency by April 29, 2013. The 28-day rule will be applicable after that date. See Notice 2013-14 for further processing and transition timeframe rules for Form 8850.  

For more information on the pre-screening and certification process, see Form 8850, Pre-Screening Notice and Certification Request and the instructions.

Employers should contact their individual state workforce agency with any specific processing questions for Forms 8850.

Claiming the Credit

Taxable Employers

For taxable employers, the WOTC may be claimed for hiring targeted group members, including qualified veterans, who begin work before Jan.1, 2014.

After the required certification is secured, taxable employers claim the tax credit as a general business credit against their income tax. The process for taxable employers claiming the WOTC remains the same.
For additional information, see:

Tax-exempt Employers

Qualified tax-exempt organizations described in IRC Section 501(c) and exempt from taxation under IRC Section 501(a), may claim the credit for qualified veterans who begin work on or after Nov. 22, 2011, and before Jan.1, 2014. Tax-exempt employers may not claim the WOTC for other targeted group members. 

After the required certification is secured, tax-exempt employers claim the credit against the employer social security tax by separately filing Form 5884-C, Work Opportunity Credit for Qualified Tax-Exempt Organizations Hiring Qualified Veterans (PDF).

File Form 5884-C after filing the related employment tax return for the employment tax period for which the credit is claimed. It is recommended that qualified tax-exempt employers do not reduce their required deposits in anticipation of any credit as the forms are processed separately.

Page Last Reviewed or Updated: 20-Mar-2014

The File Back Tax Returns Online

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