Deconstruct Your Form 1099-DIV
Enter the values from your form below to see what they mean and how they impact your taxes. The primary benefit is that 'Qualified Dividends' are taxed at much lower rates than ordinary income.
Your 1099-DIV Data
What it is:
The total dividends you received. This amount includes any 'Qualified Dividends' from Box 1b.
⭐ Tax Benefit:
This is the most important box for tax savings. This portion of your dividends is taxed at lower long-term capital gains rates (0%, 15%, or 20%) instead of your higher ordinary income tax rate.
⭐ Tax Benefit:
These distributions from mutual funds or REITs are also taxed at the lower long-term capital gains rates.
⭐ Tax Benefit (Deferral):
This is a "return of capital." It's not taxed now. Instead, it lowers the cost basis of your investment, deferring the tax until you sell.
⭐ Tax Benefit (Exemption):
This income, typically from municipal bond funds, is generally exempt from federal income tax.
Your Estimated Tax Impact
Understanding the Key Benefits
Lower Tax Rates
Qualified dividends and capital gain distributions are taxed at 0%, 15%, or 20%, which is typically much lower than the rates for regular income like salary or interest.
Tax Deferral
"Return of Capital" (Box 3) isn't taxed immediately. It reduces your investment's cost basis, so you only pay tax on the increased gain when you eventually sell the asset.
Tax Exemption
"Exempt-Interest Dividends" (Box 12) from municipal bond funds are generally free from federal income tax, providing a direct tax saving.