6 ms·

That's a rather big misstatement: most lower income people (most people in general actually) won't be investing post-tax, a 1099-DIV really is quite uncommon I

That's a rather big misstatement: most lower income people (most people in general actually) won't be investing post-tax, a 1099-DIV really is quite uncommon It's still a shitty and stupid situation... but that doesn't mean it's relevant for most free filers. You should be able to skip the foreign tax credit if you manually enter the 1099-DIV: simply enter foreign taxes paid field on the 1099-DIV as 0, and your tax software won't offer to credit it.

dontbenebby 7y ago
Many people's companies don't offer 401ks. The limit for IRAs is lower than that for 401ks. It is very common to open a brokerage account if you had more than 5500 you wanted to put away. (Ex: grad student who interns in the summer, contractor with boom and bust pay cycle, or any worker in a company that doesn't offer a 401k) >You should be able to skip the foreign tax credit if you manually enter the 1099-DIV: simply enter foreign taxes paid field on the 1099-DIV as 0, and your tax software won't offer to credit it. I'm not sure it's legal to lie about the contents of the 1099-DIV, even if the lie is to the government's benefit :)
Consultant32452 7y ago
Am I correct in understanding that interest paid to deposits at a credit union get you a 1099-DIV? And wouldn't that mean virtually everyone who banks at a credit union would get that form? Also, anyone who owns savings bonds or CDs. Those are out of fashion these days, but many people still get them. Your point stands that these are still not the majority of the population, I just wanted to add some more pathways a person might get such a tax form.
- dontbenebby 7y ago
  That may have been what caused it as well. It was a while back and my memory is fuzzy. I've since optimized my investment strategy (small amount in checking, rest in investments) The IRS doesn't require institutions to generate 1099s for <10 dollars in interest.
- astura 7y ago
  >Am I correct in understanding that interest paid to deposits at a credit union get you a 1099-DIV? No, income from interest paid on deposit accounts is reported on form 1099-INT, not 1099-DIV. 1099-DIV is for dividend income. 1099-INT for interest income. They are are reported different places on your tax form. Nowadays most people don't get 1099-INTs from their banks or credit unions because interest rates are so low most people are making no more than $1-$2 a year in interest because rates are so low and financial institutions aren't required to issue 1099-INTs for interest income below $10. I used to get them from my credit union back in high school when rates were higher.
  - ryandrake 7y ago
    All it takes to generate $10 in interest is $1000 in a 1% savings account or $500 in a 2% CD. Anyone with even this small a savings will be issued a 1090-INT, no?
    - astura 7y ago
      No because rates aren't 1-2% in a typical savings account from a standard bank. If you want 1-2% interest you'll have to have a "high interest savings account" which have historically been online-only offerings and most people really can't be bothered to open up a new account and manage multiple accounts and do the transfers. For example, if you had $20,000 in a Chase savings account AND had a "Premier Relationship" with them then you'd get an interest rate of 0.04%, or a whopping $8 in interest for the year. https://www.chase.com/personal/savings/interest-savings/interest-rates https://www.chase.com/personal/savings/interest-savings/inte... Its worth noting that rates have gone up significantly in the last year and a half, at one point it got to the point where checking accounts and savings accounts had the same interest rates at many banks and many people stopped using savings accounts entirely at that point.
      - ryandrake 7y ago
        Online makes it even easier. I opened a >2.5% 12 mo CD online and it took an hour max. No pre-existing relationship with the bank. The high yield savings accounts tend to have a few strings attached but nothing I’d consider a barrier to someone with at least a job that offers direct deposit. The biggest barrier to getting a 1090-INT is not the bank or the APR. It is having a low income and not enough money to save.

dontbenebby 7y ago

Many people's companies don't offer 401ks. The limit for IRAs is lower than that for 401ks. It is very common to open a brokerage account if you had more than 5500 you wanted to put away. (Ex: grad student who interns in the summer, contractor with boom and bust pay cycle, or any worker in a company that doesn't offer a 401k) >You should be able to skip the foreign tax credit if you manually enter the 1099-DIV: simply enter foreign taxes paid field on the 1099-DIV as 0, and your tax software won't offer to credit it. I'm not sure it's legal to lie about the contents of the 1099-DIV, even if the lie is to the government's benefit :)

Consultant32452 7y ago

Am I correct in understanding that interest paid to deposits at a credit union get you a 1099-DIV? And wouldn't that mean virtually everyone who banks at a credit union would get that form? Also, anyone who owns savings bonds or CDs. Those are out of fashion these days, but many people still get them. Your point stands that these are still not the majority of the population, I just wanted to add some more pathways a person might get such a tax form.

dontbenebby 7y ago
That may have been what caused it as well. It was a while back and my memory is fuzzy. I've since optimized my investment strategy (small amount in checking, rest in investments) The IRS doesn't require institutions to generate 1099s for <10 dollars in interest.
astura 7y ago
>Am I correct in understanding that interest paid to deposits at a credit union get you a 1099-DIV? No, income from interest paid on deposit accounts is reported on form 1099-INT, not 1099-DIV. 1099-DIV is for dividend income. 1099-INT for interest income. They are are reported different places on your tax form. Nowadays most people don't get 1099-INTs from their banks or credit unions because interest rates are so low most people are making no more than $1-$2 a year in interest because rates are so low and financial institutions aren't required to issue 1099-INTs for interest income below $10. I used to get them from my credit union back in high school when rates were higher.
- ryandrake 7y ago
  All it takes to generate $10 in interest is $1000 in a 1% savings account or $500 in a 2% CD. Anyone with even this small a savings will be issued a 1090-INT, no?
  - astura 7y ago
    No because rates aren't 1-2% in a typical savings account from a standard bank. If you want 1-2% interest you'll have to have a "high interest savings account" which have historically been online-only offerings and most people really can't be bothered to open up a new account and manage multiple accounts and do the transfers. For example, if you had $20,000 in a Chase savings account AND had a "Premier Relationship" with them then you'd get an interest rate of 0.04%, or a whopping $8 in interest for the year. https://www.chase.com/personal/savings/interest-savings/interest-rates https://www.chase.com/personal/savings/interest-savings/inte... Its worth noting that rates have gone up significantly in the last year and a half, at one point it got to the point where checking accounts and savings accounts had the same interest rates at many banks and many people stopped using savings accounts entirely at that point.
    - ryandrake 7y ago
      Online makes it even easier. I opened a >2.5% 12 mo CD online and it took an hour max. No pre-existing relationship with the bank. The high yield savings accounts tend to have a few strings attached but nothing I’d consider a barrier to someone with at least a job that offers direct deposit. The biggest barrier to getting a 1090-INT is not the bank or the APR. It is having a low income and not enough money to save.