NOMINEE DIVIDENDS AND INTEREST

Reporting Dividends or Interest you receive for another person.

If a corporation reports dividends in your name that actually belong to someone else, this is called dividends you received as a NOMINEE. You could also receive Interest as a nominee. In such cases, you should not pay tax on such income, but you must follow proper procedures to report the income to the person who actually receives the money from the dividends or interest.

You should prepare a Form 1099-DIV or 1099-INT and send them together with a Form 1096 transmittal to the IRS. You should also give the actual owner of the dividends Copy B of the Form 1099. On these forms, you should list yourself as the Payer and list the actual owner as the Recipient.

You should also report dividends or interest which you received as a nominee on Schedule B of your Form 1040 just as you would any other dividends or interest. You should then add all dividends or interest and put a subtotal on Schedule B a few lines below the last dividend or interest item you have entered.

Below this subtotal, enter “Nominee Distribution” and show the amount received as a nominee. Subtract the total of your nominee distributions from the subtotal. Enter the result on line 6 in the case of dividends. For interest you would subtract the nominee interest from the subtotal and enter the result on Line 2 of Schedule B.

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This information is not intended to be advice to the recipient. In compliance with Treasury Department Circular 230, unless stated to the contrary, any Federal Tax advice contained in this Blog was not intended or written to be used and cannot be used for the purposes of avoiding penalties.