What If I Received Form 1099-DIV but the Dividend Income Belongs to Someone Else?
If you received a Form 1099-DIV that includes dividend income belonging to another person, the IRS generally considers you a nominee recipient. This commonly happens when an investment account is held jointly, but the dividend income actually belongs, in whole or in part, to someone else.
As the nominee recipient, you're responsible for reporting the income to both the IRS and the actual owner(s) of the income.
What Is a Nominee Distribution?
A nominee distribution occurs when:
- A Form 1099-DIV is issued in your name.
- Some or all of the income reported on the form belongs to another taxpayer.
- You received the form only because your name was listed on the account.
In this situation, you must allocate the income to the correct owner(s).
What Do I Need to Do?
If part or all of the dividend income belongs to someone else, you generally need to:
- Prepare a separate Form 1099-DIV for each person who owns a portion of the income.
- List yourself as the payer on the new Form 1099-DIV.
- List the actual owner as the recipient.
- Report the amount of dividend income that belongs to that person.
- Provide a copy of the form to the recipient.
This ensures the income is reported under the correct taxpayer's Social Security number.
Do I Need to File Anything With the IRS?
Yes. In addition to preparing the nominee Forms 1099-DIV, you must generally file Form 1096, Annual Summary and Transmittal of U.S. Information Returns, with the IRS.
Form 1096 serves as a summary of all nominee Forms 1099-DIV that you're submitting.
You'll send:
- Form 1096
- Copy A of each nominee Form 1099-DIV
to the IRS.
Where Do I Get the Forms?
Forms 1099-DIV and 1096 are scannable IRS forms. Because of this, the IRS generally requires original versions for paper filing.
You can obtain official forms through:
- The IRS
- An IRS Taxpayer Assistance Center
- Approved information-return filing providers
Why Is This Important?
If you don't allocate the income correctly, the IRS may expect you to report and pay tax on the entire amount shown on the original Form 1099-DIV.
Creating nominee Forms 1099-DIV helps document that part of the income belongs to another taxpayer and ensures the income is reported under the correct taxpayer's return.
Before You File
Keep records showing how the dividend income was divided among the actual owners. Documentation such as account statements, ownership agreements, or partnership records can help support the allocation if questions arise later.
If you're a nominee recipient, taking the extra step to issue nominee Forms 1099-DIV can help prevent IRS notices and ensure each taxpayer reports only their proper share of the dividend income.
Additional Information