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Find answers to frequently asked questions
While preparing your taxes you may have a number of questions. Delaware Investments provides answers to frequently asked questions that may help you file your taxes. Please consult a tax advisor for specific questions related to your tax preparation.
Frequently asked questions
Tax forms you may receive
When will my 2008 tax forms arrive?
| Form |
Anticipated arrival |
| 2008 year-end statement |
January 2009 |
| IRS Forms 1099-B, 1099-DIV, 1099-R, 1099-Q |
February 2009 |
| IRS Form 1042-S |
March 2009 |
| IRS Form 5498-ESA (for CESAs) |
May 2009 |
| IRS Form 5498 (for all IRAs) |
June 2009 |
Can I access my tax forms online?
No, we do not currently offer forms online.
How can I get a duplicate of my tax form?
Contact the Delaware Investments shareholder service center at 800 523-1918, weekdays, 8 a.m. through 7 p.m. Eastern time.
What if my Social Security number / taxpayer identification number is incorrect on my tax forms?
Please contact our shareholder service center at 800 523-1918 weekdays, 8 a.m. through 7 p.m. Eastern time.
Why didn't I receive a tax form for my IRA transfer?
An IRA transfer to an IRA is a non-reportable event.
How should I report the amounts from the tax forms on my personal income tax form?
Please contact your tax advisor to assist you with this process.
IRS Form 1099-DIV and 1099-B
Will I always receive IRS Form 1099-DIV?
IRS Form 1099-DIV is used to report all dividends and capital gains distributions paid to you (cash or reinvested) by your Delaware Investments funds on non-retirement accounts.
You will not receive IRS Form 1099-DIV if any of the following apply to you:
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Your total dividends for a fund are less than $10
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Your fund did not pay a distribution
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Your account is a retirement account
Why did I receive an IRS Form 1099-DIV for a tax-exempt fund?
Although the fund may be tax-exempt, any capital gain distributions, as well as taxable income from temporary investments and other sources, are taxable for federal income tax purposes.
Certain transactions, including options and future transactions, may result in a tax-exempt fund realizing capital gains or loses.
Why have I not received my IRS Form 1099-DIV/B?
The IRS Form 1099-DIV/B will not be mailed out if the fund you have invested in has not paid a taxable distribution.
If your fund has paid a taxable distribution and you have not received your forms, contact our shareholder service center at 800 523-1918 weekdays, 8 a.m. through 7 p.m. Eastern time.
The amount of my foreign tax paid on IRS Form 1099-DIV exceeds the $300 maximum threshold ($600 if married filing jointly) for reporting the credit directly on Form 1040. Where do I start my paperwork?
You will need to complete IRS Form 1116. Enter RIC on line g and report all income in Part I and all foreign tax passed through in Part II.
For a more detailed explanation of the tax credit and deduction alternative, please consult a tax advisor or see IRS publication 514, Foreign Tax Credit for Individuals.
I received an IRS Form 1099-DIV for my non-IRA investments, but not for my IRA. Why is that?
The IRS Form 1099-DIV is used to report taxable dividends and capital gains. Capital gains and dividends paid to IRA accounts are tax deferred and they do not generate reporting.
An IRS Form 1099-R will be mailed to you only when you receive a cash distribution from your IRA(s).
I do not have a cost basis on my IRS Form 1099-B. Why?
You will not receive cost basis information on your accounts, if any of the following statements apply:
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You had no sales or exchanges
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Your account is a retirement or money market account
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Your account was opened prior to 1991
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Your account was transferred from another account prior to 1999
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Your account was established as a result of a fund conversion.
Distributions
What are the types of mutual fund distributions and how are they taxed?
See below for further information on dividends, short-term capital gains, and long-term capital gains. Dividends are a form of income paid by companies in a portfolio and interest payments on bonds.
Two types of income dividends can be paid out:
Ordinary dividends are taxed at an investor's ordinary income tax rate.
Qualified dividends are taxed at rates listed below:
Dividend taxation rate for 2008
| Income tax bracket |
Qualified dividends taxation rate |
| 10% |
0% |
| 15% |
0% |
| 25% |
15% |
| 28% |
15% |
| 33% |
15% |
| 35% |
15% |
How are taxable mutual fund distributions reported?
Mutual fund distributions are reported on IRS Form 1099-DIV. Look for this form to arrive by the beginning of February 2009.
What is meant by the record date for a distribution?
This is the date that is used to determine who is eligible to receive a distribution issued by the fund. Shareholders holding shares on the record date are eligible to receive the distribution. Shareholders who purchased their shares after the record date will not receive the distribution.
What is meant by the ex-date for a distribution?
This is the date that the distribution of dividends or capital gains is deducted from a mutual fund's assets and set aside for payment to shareholders.
Why do I have a capital gain distribution when my fund value is down?
The fund may have realized a capital gain from selling securities. The overall value of the fund may be down; however, the capital gain must be distributed to the shareholders.
Capital gains
What is a capital gain?
Profits resulting from the sale of securities are considered capital gains. An investor may realize capital gains when they sell shares, the fund sells securities, or when both occur.
If the fund sells securities and realizes a capital gain, they are passed to the shareholders as distributions. IRS Forms 1099-DIV and 1099-B are used to report these amounts.
When you sell or exchange mutual fund shares, you may realize a short- or long-term taxable capital gain or a capital loss.
Remember that under federal tax law, shares held for more than one year receive long-term capital gain/loss status. Shares that are held for one year or less are treated as short-term capital gain or loss.
Do I still pay taxes on capital gains even if I have them reinvested?
Capital gains in shares held in an IRA, 401(k), or any other tax-deferred investment are not taxed. All other capital gain distributions are taxable, even when reinvested.
What is considered a long/short-term capital gain?
Short-term capital gains occur when there are sales of securities in a fund that are held for one year or less. For federal tax purposes, these gains are taxed as ordinary income. Short-term gains are taxed as ordinary income at your marginal tax rate ranging from 10% to 35% under federal income tax rules.
Long-term capital gains occur when there are gains from the sale of securities that are held for more than 12 months. Long-term capital gains from sales will be taxed at 15% (0% if your top marginal rate is 10% or 15%) for taxable accounts.
Why do I have a capital gain distribution when my fund value is down?
The fund may have realized a capital gain from selling securities within the portfolio of the fund. The overall value of the fund may be down, however, the capital gain must be distributed to the shareholders.
Cost basis
How do I determine the cost basis on the shares I sold?
Cost basis is the price you paid for your shares, including any sales charges.
Your cost basis may not be the same for all shares since the price may have varied if you made purchases at different times. Shares you acquired through reinvested dividends or capital gains are also considered separate purchases and should be included in your calculations.
To help simplify your calculations, we have provided cost basis information on your IRS Form 1099-B if you sold or exchanged shares in 2008 from a taxable account opened in 1993 or later.
Delaware Investments uses the average cost method to prepare your cost basis. The IRS does not require you to use the calculations that we have provided. You should feel free to consult your tax advisor to determine which method is best for you.
What method does Delaware Investments use to calculate cost basis?
Delaware Investments uses average cost method. Learn more about the average cost method in our Tax Center.
IRAs and deductions
I received an IRS Form 1099-DIV for my non-IRA investments, but not for my IRA. Why is that?
The IRS Form 1099-DIV is used to report taxable dividends and capital gains. Capital gains and dividends paid to IRA accounts are tax deferred and they do not generate reporting.
An IRS Form 1099-R will be mailed to you only when you receive a cash distribution from your IRA(s).
Why didn't I receive a tax form for my IRA transfer of assets?
An IRA transfer of assets to an IRA is a non-reportable event.
How do I take a tax deduction for foreign taxes paid?
List the amount of foreign taxes paid reported on your IRS Form 1099-DIV with any other deductions on line 8 of IRS Form 1040, Schedule A.
If you received more than one IRS Form 1099-DIV, combine the foreign tax paid and enter the total on Schedule A.
Please note that you must itemize in order to take a foreign tax deduction.
A foreign tax deduction is not available if you use the standard deduction.
Can I take a tax credit or deduction if my account is a tax-sheltered plan?
No. Because earnings from a tax-qualified plan are not taxable until withdrawn, any foreign taxes paid within a tax-sheltered plan are not eligible for a tax credit or deduction.
Statement information
When will my 2008 annual account statements arrive?
| Form |
Anticipated arrival |
| 2008 Year-end statement |
January 2009 |
| IRS Forms 1099-B, 1099-DIV, 1099-R, 1099-Q |
February 2009 |
| IRS Form 1042-S |
March 2009 |
| IRS Form 5498-ESA (for CESAs) |
May 2009 |
| IRS Form 5498 (for all IRAs) |
June 2009 |
Can I use the information on my last account statement of the year to file my tax return?
No. Your account statement reports distributions for financial accounting purposes, which may differ from the information required for federal tax purposes. For example, certain distributions declared in December to shareholders of record in such month, but paid in January, are taxable as if they were paid in December.
Additional information
How can I have my tax refund deposited directly into my mutual fund?
Delaware Investments provides the opportunity for you to directly deposit your tax refund into your mutual fund.
To do so, use IRS Form 1040, fill out section 73b-d with the following information:
| Line 73b |
021000018 |
| Line 73c |
Checking |
| Line 73d |
55558999 + taxpayer's Social Security number (17 digits total) |
Mail your completed IRS Form 1040 as you normally would. Lastly, fill out and mail the Tax Refund Direct Transfer (TRDT) form.
Please see instructions for investing your tax refund for
requirements and more detailed instructions.
What is a capital surplus/return of capital?
A return of capital dividend (for tax purposes) is a distribution in excess of tax basis of earnings or profits. These returns of capital distributions are generally not taxed. A return of capital distribution reduces your basis in the shares. Your basis cannot be reduced below zero.
If your basis is zero you must report the return of capital distribution on your tax return as a capital gain.
I earned dividends but did not get a form. Why?
IRS Form 1099-DIV will not be mailed if the fund you invested in has not paid any taxable distributions.
If you have any questions about whether or not your dividends are taxable, contact our shareholder service center at 800 523-1918 weekdays from 8 a.m. through 7 p.m. Eastern time.
What is qualified dividend income?
When the fund receives dividends from domestic corporations and qualified foreign corporations, they are considered qualified dividend income.
Qualified dividend income is taxed at rates of 0% or 15% depending on your taxable income bracket.
Please refer to the IRS 2008 1040 instructions for more details.
How did a fund merger affect my tax reportability?
Generally, no gain or loss shall be recognized on exchange of shares by an acquired fund's shareholders of an acquired fund's shares for an acquiring fund's shares.
For a more detailed explanation, please review your proxy statement or consult your tax advisor.
What if I have additional questions?
If you have additional questions that we were unable to answer here, or have questions relating specifically to your tax situation, please contact your tax advisor.
The information contained in the Tax Center is not intended to be legal or tax advice. Please consult a tax advisor if you need assistance preparing your tax return.
Information may be abridged and therefore incomplete. Any discussion pertaining to taxes in this communication (including attachments) may be part of the promotion or marketing of a product. As provided for in government regulations, advice (if any) related to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code. Individuals should seek advice based on their own particular circumstances from an independent tax advisor.
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