How to Locate and Claim Unclaimed Dividends

Dividends are distributions of a company’s earnings to its shareholders. These payments become “unclaimed” when a company or its transfer agent is unable to deliver the funds to the rightful owner. This situation arises when a shareholder moves and does not update their address, a name change is not reported, or a shareholder passes away and their heirs are unaware of the stock ownership.

Locating Potential Unclaimed Dividends

The primary repository for unclaimed property, including dividends, is each state’s official unclaimed property office. Under escheatment laws, companies must transfer assets to the state after a period of inactivity, often three to five years. You should search the databases of every state where you or your relatives have resided. A centralized resource for this is MissingMoney.com, which allows you to search for unclaimed property across participating states through a single query.

Before funds are turned over to the state, they are held by the company’s transfer agent. If you know the specific stock for which dividends might be owed, you can contact the company’s investor relations department. This department can direct you to the correct transfer agent, who maintains the official records of shareholders and dividend payments. Contacting the agent directly can be a more immediate way to locate dividends that have not yet been escheated.

In situations where a brokerage firm has ceased operations, the U.S. Securities and Exchange Commission (SEC) can be a source of information. The SEC does not hold unclaimed funds but offers guidance on its website for investors of failed broker-dealers. Searching these resources can help you identify the trustee responsible for distributing any remaining assets.

Required Documentation for Your Claim

Once you locate a potential claim, you must gather specific information to validate your ownership. You will need to provide:

• Your full legal name, as well as any previous names
• Your Social Security Number
• A history of your physical addresses, particularly the one on record when the dividends were issued

To substantiate your claim, you will be required to submit copies of official documents. A clear copy of a current, government-issued photo ID, such as a driver’s license or passport, is necessary to verify your identity. You must also provide proof of your Social Security Number and a document that proves your connection to the address on record, such as a utility bill or bank statement.

If you are filing a claim as an heir for a deceased shareholder, additional documentation is necessary. You must provide a certified copy of the death certificate for the original owner. You will also need legal documents that prove your status as an heir, such as:

• A copy of the probated will
• Letters of administration from the court
• Relevant pages from a trust document

Submitting Your Claim Package

After locating property through a state’s database, you can often start a claim directly from the search results. Many state unclaimed property offices offer an online portal for claim submission, which is the most efficient method. This allows you to complete the claim form and upload digital copies of your required documents directly.

If an online option is not available, the agency will provide a physical form to complete and mail. When mailing your claim, it is advisable to use a service like certified mail that provides a tracking number and delivery confirmation. This creates a record that your claim was sent and received.

Once your claim is submitted, the agency will verify the information and your entitlement to the funds. This verification can take from 90 to 180 days, depending on the complexity of the claim. Upon approval, payment is issued in the form of a check mailed to your current address.

Taxation of Claimed Dividends

Unclaimed dividends are taxable income in the year they are received by you or your heir, not the year the dividend was originally declared. You must report the total amount of the claimed dividends on your federal income tax return for the year you receive the payment.

The payer, such as the state agency or transfer agent, may issue an IRS Form 1099-DIV if the total amount paid to you is $10 or more. This form reports the amount of the dividends paid to you and to the IRS. You are required to report the income even if you do not receive this form.

The dividends you receive may be classified as either qualified or non-qualified, which affects the tax rate. Qualified dividends are taxed at lower long-term capital gains rates, while non-qualified dividends are taxed as ordinary income. The classification depends on the nature of the original stock. If this history is unknown, the income is reported as ordinary income. For complex situations, consulting with a tax professional is recommended.