Do you pay tax on reinvested dividends?

When dividends are paid to you, they're generally taxable for the year they were received. Suppose those dividends were payable during a given year and not retroactively taxed as income beforehand (which can happen).

In that case, getting form 1099-DIV on hand gives investors like yourself an opportunity to correctly reporting their grossed-up dividend amount when filing tax returns come April 15th every other month!

You can enjoy the benefits of an automated dividend reinvestment plan (DRIP) even if you're participating in a cash-based program, which allows for investing any dividends earned back into more shares.

If there are no options to choose between receiving money or stock when it comes time for payment out as a dividend, then taxes aren't imposed until later at a sale - so fund away!