Tax FAQs

Below is a list of tax-related frequently asked questions. Please select a category, then select a question. For additional information and FAQs, along with IRS forms, instructions and publications, visit the IRS website.

Year-End Tax Forms and Statements

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Composite Form 1099

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Form 1099-DIV

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  • Visit our Understanding Tax Forms page to learn more.

  • You will receive Form 1099-DIV reporting information on Composite Form 1099 if you received $10 or more in dividends or other distributions from your fund during the calendar year. Franklin Templeton is not required to report (and does not report) taxable and tax-exempt interest dividends and distributions received on your accounts in an amount of less than $10 unless backup withholding was withheld or the fund has elected to pass through foreign tax to shareholders.

    Although Franklin Templeton is not required to report an amount under $10, you are generally required to report all dividends and distributions on your income tax returns. Any amount not reported on Form 1099-DIV can be found on your year-end Asset Summary Statement.

  • Yes. Distributions made by your Franklin Templeton fund investments are reported on Form 1099-DIV and must be reported on your federal and state income tax returns whether they are received in cash or reinvested in additional fund shares.
  • Yes. If your tax-free fund distributed any tax-exempt interest dividends, ordinary income or capital gains of $10 or more, you will receive information under the Form 1099-DIV section of the Composite Form 1099.
  • Even though tax-exempt interest dividends are exempt from regular federal income tax, the IRS requires that you report tax-exempt interest dividends. Reporting this income on your tax return does not cause it to be subject to regular federal income tax.
  • Franklin Templeton is not required to report distributions less than $10 unless backup withholding was withheld or the fund elected to pass through foreign taxes to shareholders. Although the IRS does not require Franklin Templeton to report distributions less than $10, the IRS requires you to report such distributions on your income tax return. Distributions less than $10 can be found on your year-end Asset Summary Statement.
  • Yes. Registered shareholders can view or print their tax forms by logging into their account on franklintempleton.com. Login to your account or register now for account access.
  • Yes. Distributions made to you, that Franklin Templeton is required to report to the IRS shortly after the close of year, are reported under the taxpayer identification number you provided on your account(s). A separate Composite Form 1099 is generated for each account you own.

    You could also receive more than one Form 1099-DIV per account if:

    1. You received dividends while residing in California, then moved to another state and received additional dividends while residing in the new state
      OR
    2. You received dividends while residing in another state and then moved to California and received additional dividends.
  • If you receive Form 1099-DIV that includes income attributable to other taxpayers with different taxpayer identification numbers, you may need to follow the IRS guidelines for nominees. Please refer to the Instructions for Form 1040, U.S. Individual Income Tax Return, Schedule B, Interest and Ordinary Dividends.

    IRS forms, instructions and publications can be obtained free of charge by calling the IRS at (800) 829-1040. You may also view these materials on the IRS website.

Form 1099-B

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Cost Basis Reporting Information

To learn more about cost basis reporting, visit our Cost Basis Information page.

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    Form 1099-Q

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    Form 1099-R

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    Form 5498

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    Form 5498-ESA

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    Form 1042-S

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    • Visit our Understanding Tax Forms page to learn more.

    • If you are a nonresident alien individual or foreign entity with investments in Franklin Templeton U.S. mutual funds, you will receive a Form 1042-S, if you received ordinary income dividends (including short-term capital gain and interest-related dividends) or other distributions from long-term capital gains, gains from U.S. real property interests or return of capital during the calendar year.

    Tax Withholding for Retirement Accounts

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    Capital Gains—Long-Term, Short-Term

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    • Capital gains and losses result from the sale of capital assets. The sale or exchange of securities (including mutual fund shares) generally results in a capital gain or loss. When a security is sold for more than its tax basis (generally, the purchase price), a capital gain results. When a security is sold for less than its tax basis, a capital loss results.
    • Short-term capital gains are capital gains realized on the sale of securities (including mutual fund shares) held for 1 year or less. When a fund distributes its short-term capital gains, these amounts will be reported to you as an Ordinary Dividend on Form 1099-DIV, and will be taxable at ordinary income tax rates.
    • Long-term capital gains are currently taxed at favorable rates. These reduced tax rates apply to long-term capital gains realized on the sale of securities (including mutual fund shares) held for more than 1 year and to long-term capital gains distributed by mutual funds. When a fund distributes its long-term capital gains, these amounts will be reported to you as a Capital Gain Distribution on Form 1099-DIV.
    • Ordinary income dividends are dividends paid by a mutual fund from its net investment income. Ordinary income dividends, along with any distributions of net short-term capital gains, are reported to shareholders as Ordinary Dividends on Form 1099-DIV.
    • Capital gain distribution information is available on the Tax Information page for each fund located on this website. Please use fund search for the tax information for a specific fund.
    • Additional information on how to report capital gains and losses, including determining the tax basis you have in your mutual fund shares, can be obtained by reading IRS Publications 544, Sales and Other Dispositions of Assets, and 551, Basis of Assets. These publications can be downloaded from the IRS website.

    Direct U.S. Government Obligation

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    • Obligations issued by the U.S. government such as Treasury bills, U.S. savings bonds and U.S. agency obligations are known as direct U.S. government obligations.

    • States generally grant tax-exempt status to income from direct U.S. government obligations. This tax-exempt status also applies to dividend distributions paid to fund shareholders as a result of investing in these types of securities. Depending on the law in your state, you may be entitled to report a percentage of fund ordinary income dividends as tax-exempt income on your state personal income tax return. However, some states impose minimum investment threshold requirements or other restrictions on the pass through of this exempt-interest income. Please consult your tax advisor regarding the exemption of U.S. government interest in your state.
    • The percentage of income your fund earned from direct U.S. government obligations is available on the Tax Information page for each fund located on this website. Please use fund search for the tax information for a specific fund.
    • Ordinary income dividends paid by funds as a result of investing in direct U.S. government obligations are generally exempt from state and local taxation. Government National Mortgage Association (GNMA or Ginnie Mae), Federal National Mortgage Association (FNMA or Fannie Mae), and Federal Home Loan Mortgage Corporation (FHLMC) securities are guaranteed by the U.S. government, but are not issued by the U.S. government. A small percentage of income from direct U.S. government securities may mean that your fund invests primarily in these types of guaranteed securities.

    Foreign Source Income and Foreign Tax Paid

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    • Foreign source income is income earned by the fund from its investments in foreign securities. A shareholder’s foreign source income is the shareholder’s portion of the foreign source income earned by the fund.

    • Foreign tax paid is the shareholder’s portion of the foreign withholding taxes paid by a fund on its investments in foreign securities.

    • The foreign source income and foreign tax paid are reported on Form 1099-DIV.

    • Responding to recent favorable European court decisions, U.S. investment funds are able to file withholding tax reclaims seeking to recover tax withheld in prior years by EU Member States on dividends paid by EU resident companies in breach of EU law.

    • Under IRS Notice 2016-10, the fund is required to reduce the current year’s foreign income taxes paid by the fund by the amount of the reclaim. The shareholder’s portion of the foreign income taxes paid by the fund is reported in Box 6 of Form 1099-DIV. If the EU member state government also paid interest on the tax reclaim, the interest is included in the ordinary dividend amount paid to shareholders during the year as reflected in Box 1a of Form 1099-DIV. This interest amount is also included in the foreign source income amount and the amount of foreign taxes in Box 6 is reduced by the amount of the interest on the refund.

    • Foreign qualified dividends are the foreign source qualified dividends the fund paid to a shareholder, plus any foreign taxes withheld on these dividends. These amounts represent the portion of the foreign source income reported to a shareholder that was derived from qualified foreign securities held by the fund. Individual shareholders may find this information helpful when calculating the foreign source income adjustment needed to complete Form 1116. Please consult your tax advisor for any additional information and for the appropriate treatment in your case.