What Are Nominee Dividends?
Nominee dividends are cash dividends paid to someone on behalf of the original account owner. The recipient of the nominee dividends is required to report the nominee income on their own return unless they pass them on to the actual owners.
We’ll describe a couple of scenarios where this might occur and outline how to handle them:
- You received Form 1099-DIV showing dividends for your child’s investment account. If the form has your child’s Social Security number and the amount of the investment income is less than $1,050, you don’t have to report the income. However, if the Form 1099-DIV has your Social Security number on it, you’re required to report this nominee income on your return.
- You received a Form 1099-DIV showing dividends earned by an account jointly owned with a sibling. If your name is listed first on the account, you’re considered the tax liable owner and the form will be sent to you. To pass your sibling their share of the dividends, you’ll complete Form 1099-DIV to indicate the portion that was transferred. A copy of that Form 1099-DIV should be given to your sibling.
Should I Include My Child’s Nominee Dividends With Ordinary Dividends?
No, you shouldn’t include the nominee dividends from your child’s account with your ordinary dividends when filing taxes. Instead, you’ll provide the nominee dividend amount on Form 1040, Schedule B, Line 5 separately from ordinary dividends and write “Nominee Distribution” below the total.
How are mutual funds taxed when sold? Learn more about reporting mutual fund sales with the tax experts at H&R Block.
How much should a waitress claim in tips? Learn how to keep track of your tips for tax purposes with The Undercover Waitress, Beth Taylor, and H&R Block.
Learn about the tax implications of alimony payments and child support from the tax experts at H&R Block.
If you report income earned in a nonresident state on your resident and nonresident return, will you be double-taxed? Learn more from the tax experts