The National Directory of Certified Public Accountants

Ask A CPA - Dividends

Do I Have To Pay Tax On Reinvested Dividends ?

Yes. Dividend reinvestment plans let you use dividends to buy more shares of stock in a corporation instead of receiving the dividends in cash. If you are a member of this type of plan and use dividends to buy more stock at a price equal to its fair market value, you must report the dividend as income on IRS Schedule B.

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