Interest and dividend income can come from a variety of sources, including bank accounts, certificates of deposit (CDs), U.S. savings bonds, corporate bonds, mutual funds, and certain investment accounts. If you received this type of income during the tax year, you'll typically receive a form showing the amount that must be reported on your federal tax return.
Common forms used to report investment income include:
- Form 1099-INT for interest income from banks, credit unions, bonds, and other financial institutions.
- Form 1099-DIV for dividend distributions and certain capital gain distributions from stocks, mutual funds, and exchange-traded funds (ETFs).
- Form 1099-OID for original issue discount (OID) income, which is interest earned on certain debt instruments that were issued at a discount.
Even if you don't receive a form because the amount is small, you're generally still required to report all taxable interest and dividend income on your tax return.
What if I have more than one form?
It's common to receive multiple Forms 1099-INT, 1099-DIV, or 1099-OID from different financial institutions. Be sure to enter each form exactly as received so your return matches the information reported to the IRS.
Are all dividends and interest taxable?
Not always. Some types of income receive special tax treatment:
- Qualified dividends may be taxed at lower long-term capital gains rates.
- Tax-exempt interest, such as interest from many municipal bonds, is generally exempt from federal income tax but may still need to be reported on your return.
- Certain U.S. savings bond interest may qualify for special tax benefits in limited situations.
The IRS receives copies of Forms 1099 directly from financial institutions. Reporting your interest and dividends accurately helps avoid IRS notices, processing delays, and potential penalties. By entering all of your Forms 1099-INT, 1099-DIV, and 1099-OID, you can ensure your return reflects your complete investment income for the tax year.
Program Entry:
- Federal
- Income - Select my forms
- 1099-INT and DIV