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Do I have to pay tax on my credit union dividends?
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| Generally, any interest that you receive or that is credited to your account and can
be withdrawn is taxable income and must be reported on your tax return. Credit union dividends, although commonly
referred to as dividends, are actually interest. So are "dividends" on deposits
or share accounts in cooperative banks, domestic savings and loan associations, and mutual
savings banks. Credit union dividends must be reported on your tax return. |
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| You must give the payer of your interest income your correct social security number.
If you do not, you may be subject to a tax penalty and to back-up tax withholding. For more
information see "What is Form
W-9 and backup tax withholding?" You should receive
Form 1099-INT for interest income and an Form
1099-OID for original issue discount from any paying institutions. You may receive a
similar or substitute tax statement from each payer. Payers of interest of $10 or more are
required to furnish you and the IRS with this tax information. This tax information is also usually included
on your year-end account statement. Even if you do not receive a tax statement or
Form 1099
you are still responsible for reporting all taxable interest income on your tax return. The IRS is notified
of all interest paid by financial institutions on magnetic media. If you do not include
your interest income on your tax return the IRS will know when their computer system
matches your tax return to the tax information provided by payers. You will then be notified,
usually by mail, of the amount of additional tax, interest, and penalties that you
owe.
Interest of $1,500 or Less
If your taxable interest income is $1,500 or less, you need to show that
taxable income on Line 8a of Form 1040
or Form 1040A, or
Line 2 of Form 1040EZ.
Interest of More Than
$1,500
If your taxable interest income is more than $1,500 you must file Form 1040 or
Form 1040A.
You cannot file Form 1040EZ. Start by showing your interest income on Form 1040, Schedule B, or on
Schedule 1 of
Form
1040A. FolIow the instructions and this will carry over the information to
Line 8a
of Form 1040 or Form 1040A.
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Related tax
information about credit union dividends |
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| Income Related Questions and Answers |
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IRS publications about credit union dividends:
For additional tax information about credit union dividends refer to
IRS Publication 550, Investment
Income and Expenses. Also see
IRS Publication
17, Your Federal Income Tax. |
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Ask Julian Block your IRS and tax questions! |
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If you can't find the answer to your IRS or tax question in our
web you can call former IRS Special Agent and one of the country's foremost tax attorneys, nationally syndicated columnist ("The Tax
Adviser") Julian Block. Julian is also the tax Editor of Mutual Funds Magazine, America's premier investment magazine. To
call Julian for a tax consultation click
here. |
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