Dividends

What are dividends?

Dividends are distributions of money, stock or other property paid to you by a corporation. Dividends may also be reported to you on a Form K-1 from a partnership, an estate, a trust, or an S-corporation.

Dividends vs Interest income

Some amounts you receive that are called dividends are actually interest income and are reported on Schedule B, Part I and/or line 8a of 1040 form. An example of a dividend that is actually interest income is dividend received from a credit union.

What are the different types of dividends?

The major types of dividends are:

1. ordinary dividends
2. capital gain distributions
3. nondividend distributions
4. other distributions received from a corporation or a mutual fund

Dividends on life and casualty insurance policies

Dividends on certain life and casualty insurance policies are a partial return of the premiums you paid and are not taxable until they are ore than the total net premiums you paid for the contract.

How to report dividends from money market funds?

Report amounts of dividends you receive from money market funds as dividend income not interest. Money market funds are a type of mutual fund and should not be confused with bank money market accounts that pay interest.