When you open a mutual-fund account, you can receive dividends as cash or have them reinvested. You can also do this with stocks in either of these:
- Dividend-reinvestment program
- Employee stock-purchase plan
Most people reinvest their dividends, which buys more shares. However, when you buy shares through reinvestment, it’s like you received the cash and immediately bought more shares. You must keep track of the basis of each share when you buy them — whether directly or through reinvestment.
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What are at-risk limits, and how can they help you reduce your reported income? Learn more about at-risk rules and get tax answers at H&R Block.
Learn more about social security tax and how it affects your income and benefits from the tax experts at H&R Block.
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