Dividends received from a credit union should be reported as interest income rather than dividend income. This is because certain distributions commonly referred to as dividends, such as those from credit unions, are actually considered interest for tax purposes.
Here is how you should report this income:
- Form 1099-INT: The dividends you received from your credit union will be shown as interest income on Form 1099-INT. Ensure you receive this form from your credit union, as it will detail the amount of interest income you need to report.
- Form 1040: Report the interest income on your Form 1040, U.S. Individual Income Tax Return. Specifically, you will enter the interest income on line 2b of Form 1040.
- Schedule B (Form 1040): If your total taxable interest income is more than $1,500, you must also complete Schedule B (Form 1040), Part I, and attach it to your Form 1040. On Schedule B, you will list all your interest income, including the interest from your credit union.
- Nominee Interest: If you received interest as a nominee for the real owner, you must also include that income on Schedule B (Form 1040).
To summarize, dividends from a credit union are reported as interest income on your tax return. Ensure you receive Form 1099-INT from your credit union, report the interest on Form 1040, and complete Schedule B if your total interest income exceeds $1,500.
Sources:
Publication 550 (2023)
Publication 17 (2023)
Publication 564
Instructions for Form 1120-C (2023)
Publication 1380
