1099 Dividend Form

[WBT66]

I have form 1099- Div with an amount in box 2a. this is treated as ordinary income. How do I enter this in order to claim this as a long term capital gain ? Do I need a form 1099-B ? 

[AnnetteB6]

Enter the information reported in box 2a of Form 1099-DIV exactly as it was reported to you. 

The amount reported in box 2a is transferred automatically to Schedule D line 13 as a long-term capital gain distribution.  You do not need to do anything other than enter the information from the Form 1099-DIV.

[WBT66]

TurboTax is NOT handling the entry on line 2a as you indicated.  I only had an entry in line 2a and nothing in 2b, c,d.

the resulting 1040 shows this amount as ordinary income on line 7 with the box checked indicating Schedule D not required. Please advise.

[SteamTrain]

@WBT66 

Yes, Line 7 does not signify whether it was long term or short term gain.

Yes...Line 7 does add in short term gains, with long term gains, and with box 2a of any 1099-DIV....BUT...how it is being taxed is divided up and  handled properly in the background.  Usually on the "Qualified Dividends and Capital Gain Tax Worksheet"....but occasionally on one of a couple other possible tax computation worksheets.

[SamS1]

This is correct.  The amount in line 7 is capital gain totals.  It includes long term and short term.  Short term gains are taxed at your marginal tax rate but long term gains are taxed at the long-term gain tax rate.  Depending on your income level, it could be from 0%-15%.  The tax calculation for long term gains and qualified dividends is on page 2 of the Sch D and you should see a Qualified Dividends and Capital Gains Tax Worksheet in the printed copies of your return.  The gain will be on line 7 but the tax calculation is separate than for ordinary income.

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[WBT66]

Hi Steamtrain,

thanks for your response, I think we are getting closer to the answer. I also have both qualified and unqualified dividends.

there is no schedule D produced nor is there a qualified dividends and capital gain worksheet. 
I did notice all of these 3 items, both types of dividends and the line 2a capital gain amount on form 8960 and the extra tax from line 17 on this form carried over to Schedule 2. 
I still question why ordinary dividends and capital gains show up on lines 3b and line 7 on 1040 form to get included in the AGI amount on Line 11.

Does this appear correct ? Why are these in the AGI if they are taxed via form 8960 ?

why does TurboTax check the box on line 7 that schedule D is not required ?

[SteamTrain]

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@WBT66 wrote:

Hi Steamtrain,

..............

there is no schedule D produced nor is there a qualified dividends and capital gain worksheet. 
................. 
I still question why ordinary dividends and capital gains show up on lines 3b and line 7 on 1040 form to get included in the AGI amount on Line 11.

..........................

Does this appear correct ? Why are these in the AGI if they are taxed via form 8960 ?

why does TurboTax check the box on line 7 that schedule D is not required ?

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1)  No schedule D is produced unless you have gains other than those from box 2a of a 1099-DIV...like a form  1099-B/8949 for actual stock/bond/fund transactions you initiated during the year.   (then the IRS has a bunch of IFs/ANDs/BUTs in their instructions...but that's what they want....page 29 at :  https://www.irs.gov/pub/irs-pdf/i1040gi.pdf   )

2)  Total Ordinary dividends always go on line 3b.   The sub-part of 3b that were also qualified as show on line 3a.  Yes, I find the terminology strange...but that's the way the IRS wants it to be displayed...and has done so for many years.

3)  All of 3b and 7 added into line 11?   Yep.....IRS again, has done it that way for many years, then they use the other sheets to define how they are going to tax the individual amounts...so line 11 does not show how it is being broken up.  Yes, this confuses many folks besides yourself.

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Are you sure you used "Forms Mode"  to look for the Qualified Dividends and Capital Gain Tax Worksheet?  In Forms Mode, it show up in the left window selections below the "Tax Payments" worksheet and is labeled/shortened as  "Qual Div/Cap Gn" 

IF not that one, then you'll have to open the "1040/1040SR Wks" and look at the big box just under line 15 for the "Tax Smart Worksheet"    that worksheet shows which of 7 different calculation methods was used.....plus some extra tax forms that might add-in.

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Nope, I have no experience with the form 8960...so I don't know when it is used, nor where it's final result ends up..