Do I absolutely need to report small dividend amounts on my tax return?

I'm tearing my hair out trying to finish my tax return, but I've hit a roadblock with some tiny income amounts that seem hardly worth the hassle. Could use some wisdom here! Specifically, I earned about $385 in ordinary dividends, with around $340 of that being qualified dividends, and about $42 in section 199a dividends from a REIT investment in my taxable brokerage account. Is it worth the time and effort to figure out how to properly report these minimal dividend amounts? Or will the IRS just calculate what I owe and send me a bill if I don't include them? The amounts seem so insignificant compared to my regular income. Thanks for any guidance on handling these small dividend payments!

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20 comments

Dmitry Smirnov

•8M

Yes, you absolutely need to report ALL dividend income, regardless of how small the amount seems. The financial institution that paid your dividends will issue a Form 1099-DIV and send copies to both you and the IRS. Since the IRS already knows about this income, omitting it from your return would create a discrepancy. The good news is that reporting dividends isn't particularly complicated. If you're using tax software, there should be a section for inputting 1099-DIV information. You'll enter the ordinary dividends, qualified dividends, and section 199a dividends exactly as they appear on your form. The qualified portion of your dividends usually qualifies for lower tax rates, and the section 199a dividends from your REIT might qualify for the qualified business income deduction.

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Dmitry Smirnov

•8M

You're thinking of the reporting threshold for financial institutions, which generally must issue 1099-DIV forms for dividends of $10 or more. However, as a taxpayer, you're required to report all income regardless of amount - there is no minimum threshold for reporting on your tax return. Section 199a dividends are a special category that came with the 2017 tax law changes. These are dividends paid by REITs (Real Estate Investment Trusts) that may qualify for the Qualified Business Income deduction. When you enter this information in tax software, it will automatically calculate any potential deduction you might be eligible for based on these dividends.

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Miguel Diaz

•8M

Yes, it specifically identifies REIT dividends and the 199a components! It can read the different boxes on your 1099-DIV and tells you exactly where that information needs to go on your tax forms. This was super helpful for me since my brokerage sends pretty complicated statements. The main difference from regular tax software is that it actually reads and interprets your tax documents rather than just providing boxes for you to manually enter the information. It's more like having a tax expert look at your forms and tell you what to do with each number, especially helpful for investment income which can get complicated fast.

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AstroAlpha

•8M

If you're having trouble getting answers about your dividend reporting questions directly from the IRS, I was in the same boat last year. Spent DAYS trying to get through their phone line with no luck. Then I found https://claimyr.com which got me connected to an actual IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed I needed to report all dividend income regardless of amount and explained exactly how to handle my REIT dividends. Really saved me from potentially making a mistake on my return.

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AstroAlpha

•8M

It uses a system that continually redials and navigates the IRS phone tree until it secures a spot in line, then calls you when an agent is about to be available. It's basically doing what you'd do manually but automated, which is why it works when doing it yourself is so frustrating. They're a legitimate service that's been featured in major news outlets. I was skeptical too until I tried it - they really did get me through to an IRS agent when I'd previously wasted hours trying on my own.

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Keisha Taylor

•8M

Ok I need to apologize for my skepticism about Claimyr. After my frustrated comment I decided to try it anyway since I was desperate to talk to someone about my dividend reporting questions. IT ACTUALLY WORKED. Got a call back in about 20 minutes and spoke with an IRS representative who confirmed I needed to report all my dividend income and helped me understand how to properly handle my REIT distributions. Saved me from making errors that could have triggered an audit notice. I'm honestly shocked this service exists and works.

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Paolo Longo

•8M

The QBI deduction (the 20% deduction from Section 199a) actually doesn't have a lower threshold - it has upper income limits that phase out the deduction for high earners. For someone with modest dividend income, they would likely qualify for the full deduction on their REIT Section 199a dividends. There's no minimum amount required to claim the deduction, so even on $42 of Section 199a dividends, you could potentially get a deduction of about $8.40 (20% of the amount). Every bit helps when it comes to reducing your tax bill!

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Isabella Costa

•14h

@Oliver Becker I have to respectfully disagree with your approach. While you may have been lucky so far, the IRS s'automated document matching program called (the Automated Underreporter or AUR is) getting more sophisticated every year. Even if they don t'catch it immediately, they can send you a CP2000 notice years later asking about the discrepancy. The thing is, reporting these dividends properly might actually save you money! As @Paolo Longo mentioned, those section 199a REIT dividends could qualify for the 20% QBI deduction. Plus, if some of your dividends are qualified dividends, they re taxed'at lower capital gains rates rather than ordinary income rates. It s really'not worth the risk of penalties and interest for such a small amount of extra work. Most tax software makes it pretty straightforward to enter this information from your 1099-DIV.

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