DRIPs, DSPs, and Taxes
Filing your taxes can be a nightmare when you use direct stock investing. You’ll have difficulty calculating the value and yield of your investments. You will need to break down all dividend income, capital gains, and possible deductions from all of your DRIP investments.
Generally, you will only get two pieces of information from each company through which you’ve bought your DRIPs or DSPs to help you file taxes: account statements and a 1099-DIV.
At the end of the year, each DRIP or DSP will send you and the IRS a copy of the 1099-DIV form. This form reports all dividends and distributions paid to you over the past year. Dividends that are reinvested are considered a paid dividend at the time they are reinvested. So ...