What is Form 1099-PATR? Patronage Dividends from Cooperatives

Form 1099-PATR is commonly issued by:

• Agricultural cooperatives (grain elevators, dairy co-ops, farm supply)
• Rural electric cooperatives
• Credit unions (for patronage refunds)
• Consumer cooperatives (food co-ops, housing co-ops)
• Worker-owned cooperatives

Yes, in most cases. Patronage dividends reported in Box 1 are generally taxable as ordinary income. However, the tax treatment depends on how the patron uses the cooperative:

• Business patrons: May offset against business expenses
• Personal patrons: Report as miscellaneous income
• Farmers: May report on Schedule F

Qualified patronage dividends are paid at least 20% in cash and are taxable to the patron in the year received. The cooperative deducts them when paid.

Nonqualified patronage dividends are not paid in cash (such as stock or retain certificates). They become taxable when redeemed in cash. Box 5 reports redemptions of nonqualified notices.

Per-unit retain allocations are amounts withheld by the cooperative from the sale price of products marketed for patrons. For example, a grain elevator might retain $0.05 per bushel of grain sold. These are reported in Box 3 and are taxable to the patron when received, even if paid in certificates rather than cash.

Where you report depends on how you used the cooperative:

• Farm use: Schedule F (Form 1040)
• Business use: Schedule C or applicable business return
• Personal use: Schedule 1, Line 8z (Other Income)

Any federal tax withheld (Box 4) is claimed as a credit on your return.