The error message indicates an issue with the way Form 1099-DIV is being filed, specifically with how dividend amounts are reported in the Payment Amount Fields.
Explanation of the Error:
- Form 1099-DIV is used to report dividends and other distributions to investors.
- Field 1 (Total Ordinary Dividends) and Field 2 (Qualified Dividends) are both used to report dividend income, but they represent different categories:
- Field 1: Total Ordinary Dividends — This represents the total amount of dividends paid, including both qualified and non-qualified dividends.
- Field 2: Qualified Dividends — This represents the portion of the total ordinary dividends that are eligible for favorable tax treatment (typically subject to lower tax rates).
The Error:
- Field 1 cannot be zero if Field 2 contains a non-zero amount. Qualified dividends (Field 2) are a subset of total ordinary dividends (Field 1).
- If qualified dividends are reported, total ordinary dividends should include at least that amount, and it cannot be zero if there are qualified dividends.
How to Fix This Error:
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- Check the amount in Field 2 (Qualified Dividends). The amount in Field 1 (Total Ordinary Dividends) should at least equal or exceed the amount in Field 2.
- For example, if you report $100 in qualified dividends (Field 2), you must report at least $100 in total ordinary dividends (Field 1). The total ordinary dividends should include both qualified dividends and any other non-qualified ordinary dividends.
Summary:
The error arises because Total Ordinary Dividends (Field 1) cannot be zero if there are Qualified Dividends (Field 2) being reported. Ensure that Field 1 reflects the total amount of dividends (including qualified and non-qualified) and that Field 2 only reflects the qualified portion of those dividends.
