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.
For teenagers filing taxes due to picking up part-time seasonal work, learn the the top things you need to know at H&R Block.
The first step in how to calculate long-term capital gains tax is generally to find the difference between what you paid for your property and how much you sold it for —adjusting for commissions or fees. Depending on your income level, your capital gain will be taxed federally at either 0%, 15% or 20%.
Learn more about mutual fund and stock dividend reinvestments from the tax experts at H&R Block.
Professional golfer taxes can be complicated and confusing. Learn more about tricky golfer tax issues like travel deductions and residency rules with H&R Block.