DRIP Tax Reporting Differences
Companies design their DRIPs with different features that can complicate your tax life even more.
Some DRIP administrators charge a periodic service charge, which gets deducted from your dividends. You’ll get less stock to pay that fee. For example, a company may charge you $25 per year to administer your DRIP. Don’t forget to keep track of those fees because they should be added to the cost basis of your stock.
Some DRIP administrators acquire stock directly from the company that is sponsoring the DRIP or DSP, while others buy shares on the stock market paying a brokerage firm a commission for handling the transaction. If your DRIP or DSP buys shares on the stock market there will be brokerage costs. You need ...