IRS Form 1099-DIV: How to Report Nondividend Distributions

Form 1099-DIV is filed to report dividends and other distributions.

Generally, most taxpayers will receive a Form 1099-DIV with only boxes 1 & 2 completed for ordinary and qualified dividend income.

If a shareholder receives a Form 1099-DIV completed with Box 3 for nondividend distributions, the taxpayer received a distribution of property that exceeds the corporation's earnings and profits (E&P).

Nondividend distributions are not taxable to the shareholder because they are treated as a return of capital. The amounts received are a reduction to the shareholder's cost basis in their shares.

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