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General question about interest and dividends

I am working on my son's taxes.  He is young, but had a small brokerage account with TD Ameritrade.  Last year he had $9.12 in dividends from Ameritrade prior to the consolidation with Schwab.  He also had about $.25 in interest.

 

After the merger, he received a $3.12 dividend from Schwab and $.10 in interest from Schwab.

 

Neither company issued him a  1099-Composite.  I have read elsewhere he needs to report all income, and I have no issue with putting this in as it makes less than $1 difference in his taxes.  I'm assuming the Dividends from the stock (CISCO) would be qualified.

 

What is general practice for something like this?  Ignore the small amount of income, or report it and treat the dividends as qualified?  His taxes are pretty straight forward, he doesn't itemize and rents an apartment, so all of his income is W2 and a small amount of interest at his bank (reported on 1099-INT).

 

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3 Replies
MonikaK1
Expert Alumni

General question about interest and dividends

All income is required to be reported on the tax return; however, you can use rounding. Therefore, an interest item of less than 50 cents can be omitted.

 

If a bank, financial institution, or other entity pays you at least $10 of interest during the year, it is required to prepare a Form 1099-INT, send you a copy by January 31, and file a copy with the IRS. See this TurboTax tips article for more information.

 

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General question about interest and dividends

So if you get dividends of $9, I report it.  How do I determine if the dividends were qualified or non-qualified without a 1099?

RachelW33
Expert Alumni

General question about interest and dividends

To be considered Qualified Dividends, they must meet these requirements: 

 

  1. Be paid by a US corporation (or qualified foreign corporation). Examples: Walmart, Home Depot & Disney.
  2. Be paid as a regular dividend and not capital gain distributions, payment in lieu of dividends, or dividends from a tax-exempt organization
  3. You must have held the stock for more than 60 days during a 121-day period beginning 60 days before the ex-dividend date.

Please see IRS Publication 550 for a detailed description of Qualified Dividends and some tax scenario examples.

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