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

How Roth IRA Contributions Are Taxed

Learn more about how Roth IRA contributions are taxed with help from the experts at H&R Block.

Do I Have to Pay Taxes on a Gift?

Do you have to pay taxes on a gift? Learn about gift tax exclusion rules with help from the tax pros at H&R Block.

A guideline for paying state income tax across multiple states

Stock Splits

What are stock splits? Learn more about stock splits and their cost basis from the tax experts at H&R Block.