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In my investment account, there are holdings

  • in a mutual fund and
  • in a money market.

The 1099-DIV form of my account has the following nonzero items:

  • Total ordinary dividends (qualified dividends included),
  • Total capital gain distributions,
  • Foreign tax paid.

My investment account also has a 1099-INT form with nonzero amounts in

  • Interest Income, and
  • Tax-Exempt Interest.

After reading my monthly statements, I found the nonzero items in 1099-INT belong to the money market, instead of the mutual fund.

I wonder, in general, if a mutual fund can have 1099-INT form, besides 1099-DIV?

5

Your "money market" is cash or a "sweep account" that your broker is holding for you and on which the broker is paying you interest. The mutual fund is paying you dividends, not interest, even if it is a money-market mutual fund (often bearing a name such as Prime Reserve Fund) or bond mutual fund that is collecting interest on its investments and passing them on to you.

  • Thanks! Are you saying mutual funds do not report 1099-INT to IRS and to me? – Tim Jun 12 '12 at 13:19
  • Did you lend money to the mutual fund which sum the mutual fund agreed to return to you (together with interest at a specified rate) after a fixed period of time, or to hold for you and pay interest on for as long as it was holding the money for you? If so, you will get a 1099-INT from the fund. So check what you did: did you lend money to the mutual fund, or did you invest it in the mutual fund? Hint: reading the mutual fund prospectus might help. – Dilip Sarwate Jun 12 '12 at 13:56
  • Yeah, its perfect now:) – littleadv Jun 13 '12 at 5:59
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I believe money market "funds" (ie a mutual fund) would pay dividends, and you would get a 1099-DIV. A money market "account" however is probably actually a bank account, and you would get a 1099-INT for that. It depends how the broker has set it up. I have one of each with different brokers. If your "money market" statements mention anything about FDIC coverage, it is likely an "account" (ie a bank account) and will pay interest, not dividends.

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