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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 cre

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 8y 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 8y 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 8y 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 8y 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 8y 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.
      - astura 8y ago
        Of course, I'm not arguing its difficult or there are any barriers, I know its easy. However, I literally can't convince a single person beyond my sister to open up a high interest savings account. People just don't want to be bothered. Me? I currently have fifteen (15) bank accounts. Chasing those sign up bonuses.
        dragonwriter 8y ago
        > However, I literally can't convince a single person beyond my sister to open up a high interest savings account. People just don't want to be bothered. High-interest savings account are crappy as investments, and I'd you have to go to a different institution (or use a CD, or both) lack the frictionless (and instant) connection to primary checking that is generally the reason to use a savings account vs. a decent investment vehicle.
- deleted 8y ago
  [deleted]
- Consultant32452 8y ago
  Ok, the confusing bit for me is that credit union deposits are called shares and the earnings are called dividends. However, you still get a 1099-INT, I believe because these shares are not considered securities. https://budgeting.thenest.com/report-dividends-credit-union-account-24324.html https://budgeting.thenest.com/report-dividends-credit-union-...
  - astura 8y ago
    Ah, yes, I can see how that would be confusing. I never bought into all the credit union jargon ("share," "share draft", etc.) so I forgot they pay "dividends" instead of "interest." In short, I believe this is the way it works: because credit union members are owners of the credit union, the profit paid to members are considered dividends by dictionary definition, however, the IRS considers them interest by their rules. Just like VA disability, getting a check from the government every month is obviously income, but the IRS doesn't consider VA disability income by their rules.

dontbenebby 8y 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 8y 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 8y 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 8y 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 8y 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.
    - astura 8y ago
      Of course, I'm not arguing its difficult or there are any barriers, I know its easy. However, I literally can't convince a single person beyond my sister to open up a high interest savings account. People just don't want to be bothered. Me? I currently have fifteen (15) bank accounts. Chasing those sign up bonuses.
      - dragonwriter 8y ago
        > However, I literally can't convince a single person beyond my sister to open up a high interest savings account. People just don't want to be bothered. High-interest savings account are crappy as investments, and I'd you have to go to a different institution (or use a CD, or both) lack the frictionless (and instant) connection to primary checking that is generally the reason to use a savings account vs. a decent investment vehicle.
deleted 8y ago
[deleted]
Consultant32452 8y ago
Ok, the confusing bit for me is that credit union deposits are called shares and the earnings are called dividends. However, you still get a 1099-INT, I believe because these shares are not considered securities. https://budgeting.thenest.com/report-dividends-credit-union-account-24324.html https://budgeting.thenest.com/report-dividends-credit-union-...
- astura 8y ago
  Ah, yes, I can see how that would be confusing. I never bought into all the credit union jargon ("share," "share draft", etc.) so I forgot they pay "dividends" instead of "interest." In short, I believe this is the way it works: because credit union members are owners of the credit union, the profit paid to members are considered dividends by dictionary definition, however, the IRS considers them interest by their rules. Just like VA disability, getting a check from the government every month is obviously income, but the IRS doesn't consider VA disability income by their rules.