Sofia asked in Business & FinanceInvesting · 4 weeks ago

How do I know if I have dividend income or interest income?  ?

I have some mutual funds but I’m not sure what they mean by interest or dividend income.  I always let my mutual fund reinvest whatever interest or dividend that I get back into my fund.   I know I have to pay taxes on the interest and dividend earned but since I don’t receive them as income, there is no interest or divided income tax right?   Sorry new to investing.

10 Answers

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  • Anonymous
    3 weeks ago

    Is it in an IRA account?  Then you dont have to do anything with it for taxes.  It grows tax free and you pay tax later in life when you withdraw.  If you are arent in an IRA then uncle sam will want their cut.

  • B
    Lv 7
    4 weeks ago

    you owe tax on everything, even if it's reinvested. the fund will give you a big old 1099 - DIV for the dividends and 1099 - INT for the interest.

  • 4 weeks ago

    Wrong. All interest and dividends are taxed, even if you let them reinvest. Even if you don't receive them, they are taxed exactly the same as if you did receive them.

    • Dort
      Lv 6
      4 weeks agoReport

      That's not totally true.  Interest is always taxed on your marginal tax rate.  Ordinary dividends are taxed also at your marginal tax rate.  Qualified dividends are taxed at your long term capital gains rate.

  • Judy
    Lv 7
    4 weeks ago

    Wrong. No matter what you DO with the money, like reinvest it, it's still taxed the same. The amount will be listed on the 1099 you get from your broker.

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  • Anonymous
    4 weeks ago

    Your monthly statement should list anything paid to your account from your investments.  Those can be capital gains, LT or ST, dividends or interest.  The type of income should be listed on your statement.

  • martin
    Lv 7
    4 weeks ago

    The investment companies will give you a comprehensive 1099 form by March. It will list dividends and interest. You don't have to figure this out by yourself.

  • Anonymous
    4 weeks ago

    The other answers are correct if you own these mutual funds in a regular taxable account.

    The other answers neglected to consider that you may own these mutual funds inside a retirement account such as an IRA or 401k.    If that is the case, you will not (currently) owe tax on the reinvested interest and dividends. 

  • Eva
    Lv 7
    4 weeks ago

    You are taxed on the interest and dividends whether or not they are reinvested. You will receive a 1099INT for the interest and a 1099DIV for any dividends and capital gain. These must be reported on your tax return.

  • NA
    Lv 7
    4 weeks ago

    It was your choice to reinvest.  The taxing authorities see this as the same as getting a check for the income, depositing it and writing a new check to the investment house for the same amount.  It's fully taxable.

    Read the 1099 instructions to see where to enter the income on your tax return.

  • 4 weeks ago

    You will receive a 1099-div and a 1099-int from the investment house or from the companies you are investing in. Those forms will tell you total gains and whether any are taxable income. Just because you are reinvesting instead of taking the cash does not mean you won’t owe taxes.

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