Guides
Form 1099-DIV Explained: Dividends and Distributions
Form 1099-DIV is the information return that banks, brokers, and mutual funds send when they pay you dividends or distributions of $10 or more in a year. It splits your payouts into buckets that get taxed differently: total ordinary dividends in box 1a, the qualified portion in box 1b, capital gain distributions in box 2a, and a return of capital in box 3. You get a copy, and so does the IRS, so the numbers on your return should match.
This guide walks each box, explains the difference between ordinary and qualified dividends, covers capital gain distributions, and lays out the 0/15/20 percent qualified-dividend tax rates for 2026.
What Is Form 1099-DIV?
Form 1099-DIV, titled Dividends and Distributions, is an IRS information return that payers file when they distribute $10 or more in dividends and other payouts to an investor during the year. The payer sends Copy B to you (usually by January 31 or mid-February for consolidated broker statements) and files Copy A with the IRS.
The form covers dividends from stocks, exchange-traded funds (ETFs), and mutual funds, plus capital gain distributions from funds and real estate investment trusts (REITs). It does not cover interest (that is Form 1099-INT) or brokerage sales of shares you sold yourself (that is Form 1099-B).
Reporting kicks in at $10 for most dividends. A separate $600 threshold applies to liquidation distributions. Even if you receive no form because a payout fell under $10, the income is still taxable and you are expected to report it.
Box 1a vs Box 1b: Ordinary vs Qualified Dividends
Box 1a reports your total ordinary dividends, and box 1b reports the slice of that total which is qualified and eligible for lower capital gains rates. Box 1b is a subset of box 1a, not an amount you add on top. The difference matters because ordinary dividends are taxed at your regular rate (10 to 37 percent), while qualified dividends may be taxed at 0, 15, or 20 percent.
Box 1a includes everything treated as an ordinary dividend: regular corporate dividends, reinvested dividends, money market fund dividends, and short-term capital gain distributions from funds. The full box 1a amount is taxable.
Box 1b tells you how much of box 1a met the tests for qualified treatment. To be qualified, a dividend must be paid by a U.S. corporation or a qualified foreign corporation, and you must satisfy a holding period: more than 60 days during the 121-day window that starts 60 days before the ex-dividend date (91 days in a 181-day window for certain preferred stock). Payouts from REITs, money market funds, and dividends on stock you did not hold long enough generally stay in the ordinary (non-qualified) bucket.
Capital Gain Distributions (Box 2a)
Box 2a reports total capital gain distributions, which are long-term capital gains that mutual funds and REITs pass through to shareholders when they sell appreciated holdings inside the fund. These are taxed at long-term capital gains rates (0/15/20 percent) even if you held the fund for less than a year, and they generally flow to Schedule D.
Boxes 2b through 2f break out special-rate slices of the box 2a total. Box 2b is unrecaptured Section 1250 gain, taxed at a maximum 25 percent, tied to depreciated real property. Box 2c is Section 1202 gain from qualified small business stock. Box 2d is collectibles gain, taxed at a maximum 28 percent. Boxes 2e and 2f report Section 897 amounts relevant mainly to foreign investors in U.S. real property.
Box 3: Nondividend Distributions (Return of Capital)
Box 3 reports nondividend distributions, also called a return of capital. This is money the payer returns to you out of its own capital rather than earnings, so it is not taxed as income when received. Instead, it reduces your cost basis in the investment, which can increase your taxable gain when you eventually sell.
If return-of-capital distributions reduce your basis to zero, any further nondividend distributions become taxable as capital gain. Track box 3 amounts carefully, because your broker may not always adjust basis for you, especially for older lots. See our guide on how to calculate cost basis for the mechanics.
The 1099-DIV Box Table
The table below summarizes the most-used boxes, what each reports, and where the amount typically lands on your return.
| Box | Label | What it reports | Where it goes |
|---|---|---|---|
| 1a | Total ordinary dividends | All taxable dividends, including reinvested and money market fund dividends | Form 1040, line 3b (Schedule B if over $1,500) |
| 1b | Qualified dividends | Subset of 1a eligible for 0/15/20% rates | Form 1040, line 3a |
| 2a | Total capital gain distributions | Long-term capital gains passed through by funds and REITs | Schedule D (or 1040 line 7 directly if no other gains) |
| 2b | Unrecaptured Section 1250 gain | Real-property depreciation recapture, max 25% rate | Schedule D worksheet |
| 2c | Section 1202 gain | Qualified small business stock gain | Schedule D worksheet |
| 2d | Collectibles (28%) gain | Gains on art, metals, collectibles, max 28% rate | Schedule D worksheet |
| 3 | Nondividend distributions | Return of capital; reduces cost basis | Not income; adjust basis |
| 4 | Federal income tax withheld | Backup withholding (typically 24%) | Form 1040 payments section |
| 5 | Section 199A dividends | Qualified REIT dividends eligible for the 20% QBI deduction | Form 8995/8995-A |
| 7 | Foreign tax paid | Foreign taxes withheld on dividends | Foreign tax credit (Schedule 3 or Form 1116) |
| 12 | Exempt-interest dividends | Tax-exempt muni bond fund income | Form 1040, line 2a |
Qualified Dividend Tax Rates for 2026
Qualified dividends and long-term capital gain distributions are taxed at 0, 15, or 20 percent, based on your taxable income and filing status. The rate brackets below apply for the 2026 tax year and adjust for inflation annually, while the underlying 0/15/20 structure has held steady.
| Filing status | 0% rate up to | 15% rate | 20% rate above |
|---|---|---|---|
| Single | $49,450 | $49,451 to $545,500 | $545,500 |
| Married filing jointly | $98,900 | $98,901 to $613,700 | $613,700 |
| Head of household | $66,700 | $66,701 to $579,600 | $579,600 |
Two things can raise the effective rate. High earners may owe the 3.8 percent Net Investment Income Tax (NIIT) once modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly). And ordinary (non-qualified) dividends in box 1a but not box 1b are taxed at your marginal rate, which can reach 37 percent.
Because qualified dividends stack on top of your other taxable income, part of a single payout can fall in the 0 percent band and part in the 15 percent band. Our overview of the 2026 capital gains landscape shows how these thresholds interact with realized gains.
How to Report 1099-DIV on Your Tax Return
Report total ordinary dividends (box 1a) on Form 1040, line 3b, and qualified dividends (box 1b) on line 3a. If your total ordinary dividends exceed $1,500, you must also file Schedule B listing each payer. Capital gain distributions (box 2a) go on Schedule D, or directly on Form 1040 line 7 if you have no other gains or losses to report.
The IRS matches the copies payers file against your return. If you leave a 1099-DIV off, expect a CP2000 notice proposing additional tax. Box 4 backup withholding (usually 24 percent) counts as tax already paid and goes in the payments section of Form 1040, so you get credit for it. For a broader look at how withholding flows through your return, see our guide on tax withholding.
Frequently Asked Questions
What is the difference between box 1a and box 1b on a 1099-DIV?
Box 1a is your total ordinary dividends for the year, and box 1b is the portion of that total that is qualified. Box 1b is included within box 1a, not added to it. The qualified portion in box 1b may be taxed at 0, 15, or 20 percent, while the rest of box 1a is taxed at your ordinary income rate of up to 37 percent.
Do I have to report a 1099-DIV if it is under $10?
Payers are only required to issue a 1099-DIV when dividends reach $10, so you may not receive a form for smaller amounts. The income is still taxable, though, and you are expected to report it. Check your year-end brokerage statement for dividends that did not trigger a separate form and include them on your return.
Are capital gain distributions the same as selling my shares?
No. Capital gain distributions in box 2a are gains the fund realized inside the portfolio and passed through to you, and they are reported on your 1099-DIV. Selling your own shares is a separate transaction reported on Form 1099-B and Form 8949. Both may end up on Schedule D, but they come from different events.
Is a nondividend distribution (box 3) taxable?
Not when you receive it. A box 3 nondividend distribution is a return of your own capital, so it lowers your cost basis instead of counting as income. Once your basis reaches zero, further nondividend distributions become taxable as capital gain. Keep records, because unadjusted basis can lead to overpaying tax when you sell.
Why are some of my dividends not qualified?
Dividends can be non-qualified if you did not meet the holding period (more than 60 days in the 121-day window around the ex-dividend date), or if they came from a source that does not qualify, such as REITs, money market funds, or certain foreign corporations. These amounts appear in box 1a but not box 1b and are taxed at ordinary rates.
What is box 5, Section 199A dividends?
Box 5 reports qualified REIT dividends and certain dividends from regulated investment companies that may be eligible for the 20 percent qualified business income (QBI) deduction under Section 199A. You claim the deduction on Form 8995 or 8995-A, depending on your income. The box 5 amount is a subset of the ordinary dividends already counted in box 1a.
Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.