First- I got hit with the dreaded AMT this year for the first time ever
a whopping $10. Since it's only $10 do I bother trying to figure it out? I had about $700 in capital gains in 2015 and approx $1200 or so in qualified dividends - nothing earth shattering.
Here's one of the alerts the TaxAct software gave me in reviewing my return:
On the Form 1099-DIV from SCOTTRADE INC you entered nondividend distributions of $12.03. These distributions are a return of capital (basis) and reduce your basis in the investment. The distribution is nontaxable until it exceeds your basis in the investment. For example, you bought a share of stock for $10 then received a nondividend distribution this year of $3 it would reduce your basis to $7. You would make note of this in your own personal tax records. You do not need to report the distribution as a capital gain as you still have basis in the stock. If instead the dividend distribution was $15 then you would reduce the basis of your stock to $0 and report the excess amount of $5 as a capital gain.
Adjusting your cost basis in the investment will be an ongoing process. Each year you receive a nondividend distribution you will need to adjust your basis accordingly. Therefore using the same example as above, if you have a nondividend distribution this year which reduces your basis in the stock to $7 and next year you receive another nondividend distribution of $10 you would adjust your basis accordingly. Your basis would reduce to $0 and you would report the excess amount of $3 as a capital gain.
If you need to enter a capital gain as a result of a nondividend distribution click the info icon for information on how to enter it into the program.
What the heck? I'd presume Scottrade will keep track of this and provide whatever info I need to be entering on the various forms? or do I really need to track this stuff myself? seems daunting.