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Form 1040—Lines 7 Through 9b But see Insurance Premiums for Retired • Dividends you received as a nominee. Line 8b Public Safety Officers on page 25. Disabil- See the Schedule B instructions. ity pensions received after you reach mini- • Dividends you received on any share Tax-Exempt Interest mum retirement age and other payments of stock that you held for less than 61 days If you received any tax-exempt interest, shown on Form 1099-R (other than pay- during the 121-day period that began 60 such as from municipal bonds, each payer ments from an IRA*) are reported on lines days before the ex-dividend date. The should send you a Form 1099-INT. Your 16a and 16b. Payments from an IRA are ex-dividend date is the first date following tax-exempt interest, including any reported on lines 15a and 15b. the declaration of a dividend on which the exempt-interest dividends from a mutual • Corrective distributions from a retire- purchaser of a stock is not entitled to re- fund or other regulated investment com- ment plan shown on Form 1099-R of ex- ceive the next dividend payment. When pany, should be included in box 8 of Form cess salary deferrals and excess counting the number of days you held the 1099-INT. Enter the total on line 8b. Do not stock, include the day you disposed of the contributions (plus earnings). But do not include interest earned on your IRA, health stock but not the day you acquired it. See include distributions from an IRA* on line savings account, Archer or Medicare Ad- the examples on this page and page 23. 7. Instead, report distributions from an IRA vantage MSA, or Coverdell education sav- Also, when counting the number of days on lines 15a and 15b. ings account. you held the stock, you cannot count cer- • Wages from Form 8919, line 6. tain days during which your risk of loss was *This includes a Roth, SEP, or SIMPLE IRA. diminished. See Pub. 550 for more details. Line 9a • Dividends attributable to periods to- Were You a Statutory Employee? taling more than 366 days that you received Ordinary Dividends on any share of preferred stock held for less If you were, the “Statutory employee” box than 91 days during the 181-day period that Each payer should send you a Form in box 13 of your Form W-2 should be began 90 days before the ex-dividend date. 1099-DIV. Enter your total ordinary divi- checked. Statutory employees include When counting the number of days you dends on line 9a. This amount should be full-time life insurance salespeople, certain held the stock, you cannot count certain shown in box 1a of Form(s) 1099-DIV. agent or commission drivers and traveling days during which your risk of loss was salespeople, and certain homeworkers. If You must fill in and attach Schedule B if diminished. See Pub. 550 for more details. you have related business expenses to de- the total is over $1,500 or you received, as a Preferred dividends attributable to periods duct, report the amount shown in box 1 of nominee, ordinary dividends that actually totaling less than 367 days are subject to the your Form W-2 on Schedule C or C-EZ belong to someone else. 61-day holding period rule on this page. along with your expenses. • Dividends on any share of stock to the Nondividend Distributions extent that you are under an obligation (in- Missing or Incorrect Form W-2? Some distributions are a return of your cost cluding a short sale) to make related pay- (or other basis). They will not be taxed until ments with respect to positions in Your employer is required to provide or you recover your cost (or other basis). You substantially similar or related property. send Form W-2 to you no later than must reduce your cost (or other basis) by February 1, 2010. If you do not receive it • Payments in lieu of dividends, but these distributions. After you get back all of by early February, use TeleTax topic 154 only if you know or have reason to know your cost (or other basis), you must report (see page 93) to find out what to do. Even if that the payments are not qualified divi- these distributions as capital gains on you do not get a Form W-2, you must still dends. Schedule D. For details, see Pub. 550. report your earnings on line 7. If you lose Example 1. You bought 5,000 shares of your Form W-2 or it is incorrect, ask your Dividends on insurance policies XYZ Corp. common stock on July 9, 2009. employer for a new one. are a partial return of the premi- XYZ Corp. paid a cash dividend of 10 cents ums you paid. Do not report per share. The ex-dividend date was July TIP them as dividends. Include 17, 2009. Your Form 1099-DIV from XYZ them in income on line 21 only if they Corp. shows $500 in box 1a (ordinary divi- Line 8a exceed the total of all net premiums you dends) and in box 1b (qualified dividends). paid for the contract. However, you sold the 5,000 shares on Au- Taxable Interest gust 12, 2009. You held your shares of Each payer should send you a Form XYZ Corp. for only 34 days of the 121-day 1099-INT or Form 1099-OID. Enter your period (from July 10, 2009, through August Line 9b total taxable interest income on line 8a. But 12, 2009). The 121-day period began on you must fill in and attach Schedule B if the May 18, 2009 (60 days before the ex-divi- Qualified Dividends total is over $1,500 or any of the other dend date), and ended on September 15, Enter your total qualified dividends on conditions listed at the beginning of the 2009. You have no qualified dividends line 9b. Qualified dividends are also in- Schedule B instructions apply to you. from XYZ Corp. because you held the cluded in the ordinary dividend total re- XYZ stock for less than 61 days. quired to be shown on line 9a. Qualified Interest credited in 2009 on deposits that Example 2. Assume the same facts as in dividends are eligible for a lower tax rate you could not withdraw because of the Example 1 except that you bought the stock than other ordinary income. Generally, bankruptcy or insolvency of the financial on July 16, 2009 (the day before the ex-div- these dividends are shown in box 1b of institution may not have to be included in idend date), and you sold the stock on Sep- Form(s) 1099-DIV. See Pub. 550 for the your 2009 income. For details, see tember 17, 2009. You held the stock for 63 definition of qualified dividends if you re- Pub. 550. days (from July 17, 2009, through Septem- ceived dividends not reported on Form ber 17, 2009). The $500 of qualified divi- 1099-DIV. If you get a 2009 Form dends shown in box 1b of Form 1099-DIV 1099-INT for U.S. savings Exception. Some dividends may be re- are all qualified dividends because you held bond interest that includes ported as qualified dividends in box 1b of the stock for 61 days of the 121-day period TIP amounts you reported before Form 1099-DIV but are not qualified divi- (from July 17, 2009, through September 2009, see Pub. 550. dends. These include: 15, 2009). Need more information or forms? See page 96. - 22 -