P>You've heard about the cash patronage dividend. Maybe you've received some of it, but do you know how it works? Premier Farm Credit is a cooperative owned by its members. Each year, the primary member-elected Board of Directors reviews the association's business results and financial health and decides how much of the profit to return to the member-owners as a cash patronage dividend. That amount is then divided among the members in direct proportion to the volume of the business they conducted. Cheques are cut and mailed. The remainder of the profit not returned to the member-owners is retained by Premier Farm Credit as a reasonable reserve to support future business activity and ensure the financial health of the Association. Let's walk through an example. From January 1st to December 31st, let's say your Premier Farm Credit loans accrued gross interest totaling $20,000. All member-owners of the Association had gross accrued interest of $21 million. After a thorough review, the Board of Directors declares a $3.75 million cash patronage dividend. Your annual patronage check will be calculated like this: $20,000 divided by $21 million, multiplied by $3 million 750,000, equals $3,571. You will receive a check in mid-March of the following year for $3,571. This means your gross accrued interest for that year was only $16,429. This payout has positive and direct implications. Not only do our member-owners have access to affordable, reliable, and consistent credit they need to operate, but they also get to share in the success of their financial institution. Premier Farm Credit has paid a cash patronage dividend each year since the program was adopted, totaling $54 million over 21 years. Think about that. It's the farmers, ranchers, and communities in Northeast Colorado that benefit from the success of the business. Not a small group of bank...
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How to report patronage dividends Form: What You Should Know
A 1099-PATR form is tax form provided by the IRS that shows you were paid at least 10 in income (including dividends) and distributions from a Form 8962, Employee Pension or Annuity Plan. · The Form 1099-PATR also shows that a share of the distribution was from a qualified organization. Example 1: Employer B reported an employee's 1099-PATR income and made no distribution to the recipient. (1) Employer B: Employee A received 100 and 10 of it was a patronage dividend for 10 per month. After 10 years, his total income was 200, minus 10 of that 10 payment. (2) Employee A 100 10 → 100 (10% of his total income) → 30 → No distribution Example 2: Employer D reported an employee's 1099-PATR income and made no distribution to the recipient. The 50 of the 1099-PATR money was patronage dividend for 5.5 monthly payments. After 10 years, his total income was 100, minus 10 of that 5.5 distribution. 1099-PATR Forms and Reports There are three different forms that you can use to report patronage dividends (1099-PATR, 1099-MISC, and 1099-DIV) to the Internal Revenue Service, as well as a number of reports you can include in the Form 1040 (which you used to report other income and other deductions) to report the 1099-PATR. Example: Families at a Workplace At the end of 2009, two employees, B and C at a workplace were paid 60. They both received 30 per month from the Employer. B's and C's gross profit (after deductions) as of June 30, 2010, was (120) x 30 × 120 = 180. They reported this as their “Salary and Wages.” At the end of each year, they would be entitled to receive their patronage dividends from the Employer. In this example they would report their             “Salary and Wages” in each calendar year as B's 2024 “Salary and Wages.
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