Form 1040 Instructions - 2015 Page 23
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105 2015 Form 1040—Lines 9a Through 10
Dividends on insurance poli-
ject to the 61-day holding period rule
dividends from ABC Mutual Fund be-
cies are a partial return of the
just described.
cause you held the ABC Mutual Fund
TIP
premiums you paid. Do not re-
Dividends on any share of stock to
stock for less than 61 days.
port them as dividends. Include them in
the extent that you are under an obliga-
Use the Qualified Dividends
income on line 21 only if they exceed the
tion (including a short sale) to make re-
and Capital Gain Tax Work-
TIP
total of all net premiums you paid for
lated payments with respect to positions
sheet or the Schedule D Tax
the contract.
in substantially similar or related proper-
Worksheet, whichever applies, to figure
ty.
your tax. See the instructions for line 44
Line 9b
Payments in lieu of dividends, but
for details.
only if you know or have reason to
Qualified Dividends
know that the payments aren't qualified
Line 10
dividends.
Enter your total qualified dividends on
Example 1. You bought 5,000 shares
Taxable Refunds, Credits, or
line 9b. Qualified dividends are also in-
of XYZ Corp. common stock on July 8,
cluded in the ordinary dividend total re-
Offsets of State and Local
2015. XYZ Corp. paid a cash dividend
quired to be shown on line 9a. Qualified
Income Taxes
of 10 cents per share. The ex-dividend
dividends are eligible for a lower tax
date was July 16, 2015. Your Form
rate than other ordinary income. Gener-
None of your refund is taxable
1099-DIV from XYZ Corp. shows $500
ally, these dividends are shown in
if, in the year you paid the tax,
TIP
in box 1a (ordinary dividends) and in
box 1b of Form(s) 1099-DIV. See Pub.
you either (a) didn't itemize de-
box 1b (qualified dividends). However,
550 for the definition of qualified divi-
ductions, or (b) elected to deduct state
you sold the 5,000 shares on August 11,
dends if you received dividends not re-
and local general sales taxes instead of
2015. You held your shares of XYZ
ported on Form 1099-DIV.
state and local income taxes.
Corp. for only 34 days of the 121-day
Exception. Some dividends may be re-
period (from July 9, 2015, through Au-
If you received a refund, credit, or offset
ported as qualified dividends in box 1b
gust 11, 2015). The 121-day period be-
of state or local income taxes in 2015,
of Form 1099-DIV but aren't qualified
gan on May 17, 2015 (60 days before
you may be required to report this
dividends. These include:
the ex-dividend date), and ended on
amount. If you didn't receive a Form
Dividends you received as a nomi-
September 14, 2015. You have no quali-
1099-G, check with the government
nee. See the Schedule B instructions.
fied dividends from XYZ Corp. because
agency that made the payments to you.
Dividends you received on any
you held the XYZ stock for less than 61
Your 2015 Form 1099-G may have been
share of stock that you held for less than
days.
made available to you only in an elec-
61 days during the 121-day period that
Example 2. The facts are the same as
tronic format, and you will need to get
began 60 days before the ex-dividend
in Example 1 except that you bought the
instructions from the agency to retrieve
date. The ex-dividend date is the first
stock on July 15, 2015 (the day before
this document. Report any taxable re-
date following the declaration of a divi-
the ex-dividend date), and you sold the
fund you received even if you didn't re-
dend on which the purchaser of a stock
stock on September 16, 2015. You held
ceive Form 1099-G.
isn't entitled to receive the next dividend
the stock for 63 days (from July 16,
payment. When counting the number of
If you chose to apply part or all of the
2015, through September 16, 2015). The
days you held the stock, include the day
refund to your 2015 estimated state or
$500 of qualified dividends shown in
you disposed of the stock but not the day
local income tax, the amount applied is
box 1b of Form 1099-DIV are all quali-
you acquired it. See the examples that
treated as received in 2015. If the refund
fied dividends because you held the
follow. Also, when counting the number
was for a tax you paid in 2014 and you
stock for 61 days of the 121-day period
of days you held the stock, you can't
deducted state and local income taxes on
(from July 16, 2015, through September
count certain days during which your
line 5 of your 2014 Schedule A, use the
14, 2015).
risk of loss was diminished. See Pub.
State and Local Income Tax Refund
550 for more details.
Example 3. You bought 10,000
Worksheet in these instructions to see if
Dividends attributable to periods
shares of ABC Mutual Fund common
any of your refund is taxable.
totaling more than 366 days that you re-
stock on July 8, 2015. ABC Mutual
Exception. See Itemized Deduction Re-
ceived on any share of preferred stock
Fund paid a cash dividend of 10 cents a
coveries in Pub. 525 instead of using the
held for less than 91 days during the
share. The ex-dividend date was July 16,
State and Local Income Tax Refund
181-day period that began 90 days be-
2015. The ABC Mutual Fund advises
Worksheet in these instructions if any of
fore the ex-dividend date. When count-
you that the part of the dividend eligible
the following applies.
ing the number of days you held the
to be treated as qualified dividends
1. You received a refund in 2015
stock, you can't count certain days dur-
equals 2 cents a share. Your Form
that is for a tax year other than 2014.
ing which your risk of loss was dimin-
1099-DIV from ABC Mutual Fund
ished. See Pub. 550 for more details.
2. You received a refund other than
shows total ordinary dividends of $1,000
Preferred dividends attributable to peri-
an income tax refund, such as a general
and qualified dividends of $200. How-
ods totaling less than 367 days are sub-
sales tax or real property tax refund, in
ever, you sold the 10,000 shares on Au-
gust 11, 2015. You have no qualified
-23-
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