I own stocks set up with automatic dividend reinvestment. Do I have to report these reinvested dividends for tax purposes?

ANSWER

The BIDaWIZ Team's Answer:

You would have to report the reinvested dividends as income and owe tax on them. You should receive a form 1099 and report the gross dividends on box 1(a) and the amount of qualified dividends on box 1(b). These are taxed at long-term capital gains rates. If the amount in box 1(a) is greater than box 1(b), the difference is taxed as ordinary income. Form 1040 has a dividend worksheet on page 37 to report it.