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Reinvested dividends are taxable.
You do not enter them when entering your form 1099-DIV.
Reinvested dividends are like an additional investment which increases the cost basis.
For example, if you reinvested $100 of dividends to buy 5 additional shares of XYZ, then those 5 additional shares have a cost basis of $20 each.
Your stockbroker should keep track of this information for you.
A Reinvested Dividend is really 2 transactions. A Dividend and then a buy more shares. Just as if the fund sent you a check for the dividend and then you went and bought more shares. You don't report the new shares until you sell them.
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