- Centurion Member
- Posts: 3618
- Joined: Thu May 08, 2014 7:42 pm
- Location: United States
I am an Enrolled Agent - a federally authorized tax professional. If you receive dividends in a taxable account (unlike an IRA), they are most likely taxable as they are paid, even if you reinvest them.
The only exceptions would possibly exist if you're using the term 'dividend' more loosely than a tax professional does.
For example, if you own a mutual fund or ETF that holds only AMT-free municipal debt of your state, then interest distributions (which many non-tax pros might refer to as dividends) would be tax-exempt.
Also, a corporation/partnership/mutual fund/ETF could make a non-taxable return of capital distribution.
Many brokerages do not send out 1099s for small accounts (where the total income is less than $10 or $20).
I'm not sure what's going on in your situation. For your dividend income to realistically alter a credit decision, it would have to be a few thousand dollars. At that income level, you're definitely getting a 1099.
And brokerages report all that information not just to you, but also to the government. They send copies of the 1099s of their customers to the IRS. And even offshore institutions that used to be tax havens are now increasingly reporting to the IRS.
I would need more information about what's on your 1099 to give further advice. There is probably some additional information you need to report to the IRS. There may also be additional tax due.
TheSwarm is correct that you are making two separate transactions from a tax perspective. You're getting a dividend, and then using the cash to buy more shares automatically. From a tax perspective, it's just like you get cash and then manually enter a 'buy order' in the amount of the dividend you.
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Letting new accounts cool off since May
Really not sure what I'll add next or when