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2013 Tax Guide

Download the Domini Funds 2013 Tax Guide for helpful information to assist you with your 2013 tax return preparation.

Download Tax Guide

Form 1099-DIV

Form 1099-DIV
Who needs it?
Investors who own a non-retirement mutual fund account and received $10 or more in taxable dividends and capital gain distributions.
 
When is it mailed by?
By the first business day on or after February 15.

Dividend and Capital Gain Distributions

Every shareholder, with certain exceptions defined by the Internal Revenue Code, who has received $10 or more in taxable dividends or distributions, should be issued a Form 1099-DIV. Form 1099-DIV is also sent to account holders for whom backup withholding was taken on certain reportable transactions.

Your Form 1099-DIV lists all federally taxable dividend and capital gain distributions of $10 or more paid to your mutual fund accounts, including the Domini Social Equity Fund, Domini International Social Equity Fund, and Domini Social Bond Fund (the “Funds”). If your account is invested in more than one fund, the 1099-DIV information for each fund has been consolidated and mailed to you in a single package. However, shareholders with more than one type of account—for example, an individual account and another account that is jointly owned—will receive a separate package of tax forms for each account.

If you have one of the following types of accounts, you will not receive Form 1099-DIV:

  • Individual Retirement Accounts and other tax-deferred accounts (including Roth and Traditional IRAs, Rollover IRAs, SEP and SIMPLE IRAs, Coverdell Education Savings Accounts and qualified tuition plan accounts)
  • Accounts owned by corporations, certified nonresident aliens and certain tax-exempt organizations

The dividends and capital gains shown on Form 1099-DIV are provided for reporting on your 2013 federal income tax return, even if you reinvested your distributions in additional fund shares instead of receiving them in cash.

Dividend Distributions: Your taxable dividends and short-term capital gains are shown in Box 1a, labeled ‘Total ordinary dividends.’ The portion of the dividends in box 1a that qualify for reduced capital gains rates is shown in box 1b on the form, labeled ‘Qualified dividends.’ Qualified dividends are dividends received by the Funds (and paid to shareholders) from domestic corporations or qualified foreign corporations. To meet the requirement for qualified dividends, the security must be held by the Fund for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. Qualified dividends are subject to a maximum tax rate of 15% (0% for taxpayers in the 10% or 15% tax bracket). To report the amount of qualified dividends in box 1b as qualified dividend income, you must also satisfy the same holding requirement mentioned above with respect to your Fund shares. If the holding period requirement is not satisfied, the qualified dividends are taxable as ordinary dividend income.

Capital Gain Distributions: Long-term capital gain dividends paid by the Funds during 2013 are subject to the 15% capital gain tax rate (0% for taxpayers in the 10% or 15% tax bracket). The amount of total capital gain distributions is shown in box 2a on Form 1099-DIV. Capital gain distributions paid by the Funds that are reported on Form 1099-DIV are provided for reporting directly on Form 1040, Schedule D (Capital Gains and Losses).

Nontaxable Distributions: The amount included in box 3 of Form 1099-DIV represents amounts distributed as return of capital, which for tax purposes, are nontaxable. The amount included in box 3, labeled ‘Nondividend distributions,’ should reduce the cost basis of your shares. Once you have received return of capital distributions equivalent to your cost basis, any additional return of capital distributions received will be taxable to you as capital gain, even though they will be reported as nontaxable distributions on Form 1099-DIV. The Domini Funds paid no nontaxable distributions for 2013.

Corporate Dividend Received Deduction (For shareholders that are corporations)

Shareholders in the Domini Social Equity Fund that are corporations may be eligible to receive a 70% corporate dividend received deduction. To determine the amount of dividends that qualify, the corporate shareholder would multiply the total ordinary dividends received during 2013 (box 1a on Form 1099-DIV) by the percentage of the ordinary dividends received that qualify for the deduction. For 2013, 100% of the ordinary dividends received from the Domini Social Equity Fund qualify for the corporate shareholder dividend received deduction.

Foreign Taxes

Shareholders in the Domini International Social Equity Fund may be able to receive a tax benefit due to foreign taxes paid by the Fund. If your Form 1099-DIV lists a foreign tax credit in box 6 of the form, labeled ‘Foreign tax paid,’ you are allowed to claim a tax credit or an itemized deduction on your federal income tax return for your share of foreign taxes paid by the Fund during 2013. In most cases, you will receive more benefit by claiming a tax credit.

The information below will assist you in calculating the information necessary to claim either a credit or itemized deduction.

To calculate your total foreign source income passed through from the Fund, multiply your ordinary dividends (box 1a of Form 1099-DIV) by the foreign source income factor for the Fund. For 2013, the total foreign source income factor for the Domini International Social Equity Fund is 96.06%.

To claim a foreign tax credit, you must also satisfy certain holding period requirements with respect to your mutual fund shares. If the holding period requirements are not satisfied, the foreign taxes will qualify as itemized deductions. Please consult your tax advisor to determine whether the foreign taxes passed through to you by the Fund are either creditable or qualify as an itemized deduction, and whether to make the election to exempt you from the foreign tax credit limitation and the filing requirement of Form 1116.

Note: If claiming a tax credit on your tax return for the foreign taxes paid by the Fund, the credit may be limited due to changes for the Job and Growth Tax Relief Reconciliation Act of 2003. Please review the instructions to Form 1116 and consult with your tax advisor.

Income Derived from U.S. Government Obligations

A portion of the dividends paid by the Domini Social Bond Fund during 2013 was earned from investments in securities issued by agencies of the United States Government. View the Fund's complete portfolio holdings.

Depending on your state’s income tax laws, if any, some of this income may be exempt from state income tax. The following table lists the percentages of income earned from these obligations. To determine the amount of income from each agency, multiply the total ordinary dividends (box 1a on Form 1099-DIV) by the percentage noted.

Government Agency % of Income
Federal National Mortgage Associations (Fannie Mae) 30.28%
Federal Home Loan Mortgage Corporation (Freddie Mac) 38.45%
Government National Mortgage Association (Ginnie Mae) 2.16%