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Taxmap/pub17/p17-042.htm#TXMP3fcd24c8 Other Distributions

Distribution

You may receive any of the following distributions during the year.

Taxmap/pub17/p17-042.htm#TXMP307a535a Exempt-interest dividends.

Exempt-Interest Dividends

Exempt-interest dividends you receive from a regulated investment company (mutual fund) are not included in your taxable income. You will receive a notice from the mutual fund telling you the amount of the exempt-interest dividends you received. Exempt-interest dividends are not shown on Form 1099-DIV or Form 1099-INT.

Taxmap/pub17/p17-042.htm#TXMP4a30513c Information reporting requirement.

Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file a return. This is an information reporting requirement and does not change the exempt-interest dividends to taxable income.

Taxmap/pub17/p17-042.htm#TXMP6e271acf Alternative minimum tax treatment.

Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. See Alternative Minimum Tax in chapter 32 for more information.

Taxmap/pub17/p17-042.htm#TXMP212675a5 Dividends on insurance policies.

Dividends on insurance policies.

Insurance policy dividends that the insurer keeps and uses to pay your premiums are not taxable. However, you must report as taxable interest income the interest that is paid or credited on dividends left with the insurance company.

If dividends on an insurance contract (other than a modified endowment contract) are distributed to you, they are a partial return of the premiums you paid. Do not include them in your gross income until they are more than the total of all net premiums you paid for the contract. Report any taxable distributions on insurance policies on Form 1040, line 16b, or Form 1040A, line 12b.

Taxmap/pub17/p17-042.htm#TXMP164d7338 Dividends on veterans' insurance.

Dividends on veterans' insurance.

Dividends you receive on veterans' insurance policies are not taxable. In addition, interest on dividends left with the Department of Veterans Affairs is not taxable.

Taxmap/pub17/p17-042.htm#TXMP3c55ecf6 Patronage dividends.

Patronage Dividends

Generally, patronage dividends you receive in money from a cooperative organization are included in your income.

Do not include in your income patronage dividends you receive on:

1. Property bought for your personal use, or
2. Capital assets or depreciable property bought for use in your business. But you must reduce the basis (cost) of the items bought. If the dividend is more than the adjusted basis of the assets, you must report the excess as income.

These rules are the same whether the cooperative paying the dividend is a taxable or tax-exempt cooperative.

Taxmap/pub17/p17-042.htm#TXMP6c7b093b Alaska Permanent Fund dividends.

Alaska Permanent Fund dividend.

Do not report these amounts as dividends. Instead, report these amounts on Form 1040, line 21, Form 1040A, line 13, or Form 1040EZ, line 3.

Previous Page:  Publication 17 - Your Federal Income Tax - Nondividend Distributions Next Page:  Publication 17 - Your Federal Income Tax - How To Report Dividend Income Use     to find additional instances of index items.