Stock Dividends

 

You get a stock dividend when a company pays you a dividend with extra shares of stock instead of cash. You usually don’t need to include these dividends in your taxable income.

When you receive a dividend, the total value (basis) of the stock doesn’t change. Instead, the basis of each share changes.

Stock dividends usually don’t have tax implications until you sell the shares. So, the amount paid in cash for the fractional share is considered taxable income. Report the sale of fractional shares on Form 8949.

To learn more, see the Fractional Shares tax tip.

Related Topics

Related Resources

Tax & Retirement Questions – Answered!

Have questions about taxes and retirement? Answer common retirement tax questions about 401(k) accounts and rollovers with the H&R Block Tax Institute.

Home Sale Exclusion

Learn more about taxes on selling a home and exclusion rules with the tax experts at H&R Block.

Dividend Reinvestment

Learn more about mutual fund and stock dividend reinvestments from the tax experts at H&R Block.

Second Home Taxes

Learn more about second home tax deductions and taxes on selling a second home with the tax experts at H&R Block.