Capital Gains and Losses - Dividends Received on Restricted Stock

Restricted stock is stock that you get from your employer for services you perform. It is non-transferable and subject to a substantial risk of forfeiture. You do not have to include the value of the stock in your income when you receive it. However, if you get dividends on restricted stock, you must include them in your income as wages, not dividends. See "Restricted Property" in IRS Publication 525 Taxable and Nontaxable Income for information on restricted stock dividends.

Income received from restricted stocks will be reported as wages to you on your Form W-2 Wage and Tax Statement. You should still enter the restricted stock income in your wages on Form 1040 U.S. Individual Income Tax Return, Line 1.

To report restricted stock dividends that were also reported in your wages (if you need help accessing Form 1099-DIV, go our Form 1099-DIV - Entering Dividend Income in Program FAQ):

  1. From within your Form 1099-DIV, continue with the interview process until you reach the screen titled Dividend Income - Ordinary Dividends.
  2. Click the data entry field below 1a. Ordinary dividends, and enter the amount reported in Box 1a of the 1099-DIV you received.
  3. On the screen titled Dividend Income - Restricted Stock Dividends, click the data entry field below Restricted stock dividends reported as wages and type the amount.
  4. Continue with the interview process to enter your information.

Related Links

  • Publication 550 Investment Income and Expenses (Including Capital Gains and Losses)

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