How are reinvested dividends reported on my tax return?

When dividends are reinvested on your behalf and used to purchase additional shares or fractions of shares for you:

  • If the reinvested dividends buy shares at a price equal to their fair market value (FMV), you must report the dividends as income along with any other ordinary dividends.
  • If you're a member of a dividend reinvestment plan that lets you buy more stock at a price less than its FMV, you must also report as dividend income the FMV of the additional stock on the dividend payment date.

Report your reinvested dividends with your other dividends, if any, on Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors. You must complete Schedule B (Form 1040) and attach it to your Form 1040 or Form 1040-SR, if your ordinary dividends (in box 1a of Form 1099-DIV, Dividends and Distributions) and your reinvested dividends are more than $1,500.

Note: Keep records of the amount of the reinvested dividends, the number of additional shares purchased and the purchase dates. You'll need this information to establish your basis when you sell the shares.