Schedule D section 1250 and 1099 DIV box 1b

[patelrpn]

Hello,

 I have been overlooking instructions on back of 1099-Div from my bank and just stumbled upon. I realized that I have been omitting the qualified dividend since 2015.

I have been updating on my taxes all these years exactly to match box 1a and 1b.

My questions are-

How should I enter this correctly so that I end up paying as ordinary dividend tax?

Should I start to report correctly now for 2025 and should I go back to 2015 to amend prior years?

Here is a summary of the dividends-

2015     $  156

2016          240

2017          252

2018          306

2019          480

2020       1,728

2021

2022          720

2023          960

2024        1,200

2025        1,320

Please advise with guidance.

Thanks,

[ThomasM125]

I think you mean you omitted your qualified dividends on your tax returns going back several years. If so, they may not be taxable, as your taxable income has to be over a certain amount ($48,350 single and $96,700 married-joint in 2025) for your qualified dividends to be taxable. If your income is below the applicable threshold amount for the prior years, then you don't need to amend your return as you won't owe additional tax.

Otherwise, you should amend the returns if practical. You can only do that going back three years using TurboTax. There is an option to amend your returns in TurboTax that you will see when you log into your program. To do so, you need to follow the instructions in the program which will have you correct the entry you made on the 1099 dividend statements.

[patelrpn]

Hi Thomas,

I am sorry for not explaining correctly-

I Have been updating both boxes 1a and 1b correctly in Turbo tax but my question was about the instruction on the back of the form 1099 Div -

"Box2b . Shows the portion of the amount in box 2a that is uncultured section 1250 gain from certain depreciable real property.  See the Uncultured Section. 1250 Gain Worksheet in the instructions for schedule D (form1040)."

My question pertains to this instruction  and should I have been doing any thing for this and if so how to complete this part in Turbo tax for current year and all the past years.

Hope this helps clear any concerns.

Thanks,

Ramesh

[RobertB4444]

So you have amounts in box 2b for every year going back to 2015 (except 2021?).  That's a rarity but it can certainly happen.  If you have any other numbers in any of the other boxes on your 1099-DIV they should also be being entered into the system.  

But - just to be clear - in order for the instruction related to box 2b to apply to you there has to be an amount in that box.  The instruction does not apply to the amounts in box 1a or 1b unless there is an amount in box 2b.  The instructions for each box apply to the numbers contained in that box.

If you do have a number in that box then you can amend tax returns going back three years.  

[patelrpn]

Hi Robert and Thomas:

I am sorry for the confusion as I am confused myself.

My question pertains to instructions for 1b -

"1b. The amount shown may be dividends a corporation paid directly to you as a participant  in an employee stock ownership plan (ESOP). Report it as a dividend on your form 1040 but treat it as a plan distribution, not as investment income , for any other purpose."

Both of the boxes have the same numbers and all the other boxes are 0.  

The reported numbers in line 3 of the 1040 shows as ordinary dividends and included in AGI so I think I am correct but please advise if I should be doing it differently.

Thank you all for your time with my confusion.

[RobertB4444]

So the amount in box 1a are dividends you earned from owning stock in companies.  That gets entered in the corresponding box in TurboTax when you're doing your taxes.  The amount in box 1b is a modifier of the amount in box 1a allowing the portion of the amount in box 1a to be taxed at a lower rate.  So if there is $100 in box 1a and $50 in box 1b that means that $50 of the $100 in box 1a is "qualified" to be taxed at a lower rate.

If you have been entering the amount in box 1a but have not been entering the amount in box 1b then you may have paid more in taxes than you had to.  Although probably not very much.  Because the IRS will only let you claim a refund for three years from the due date of the return there is no point in filing any amended return older than 2022.  And 2022 must be filed by April 15th of this year in order to be eligible for receiving the refund.  And - as these are very small amounts - it may not be worth amending the returns anyway.

[patelrpn]

Thank you for explaining,

Ramesh

[patelrpn]

Hi Thomas,

Yes, all set and closed!

Thank you for follow up.