If you received a 1099-DIV that includes dividends belonging to someone else, here is how to report nominee dividends: send that person their own 1099-DIV showing their share, then subtract that share on your Schedule B as a “Nominee Distribution” so you’re only taxed on what was actually yours. Both steps are required. Do only the second and you’ve failed an information-return obligation; do only the first and you’ll still be taxed on the full amount.
When You’re Acting as a Nominee
A nominee holds legal title to stock or another investment for someone else. The 1099-DIV arrives in your name because the account is in your name, but the beneficial owner — the person who funded the investment and is entitled to the return — is the one who owes tax on their share. A parent whose brokerage account holds shares that actually belong to an adult child, or a sibling on whose name inherited stock is registered while another sibling shares the economics, are the everyday examples.
One boundary worth naming up front: spouses do not file nominee returns for each other. If dividends in your account belong to your spouse, no separate 1099-DIV between you is required.1Internal Revenue Service. General Instructions for Certain Information Returns (2025)
Issue a 1099-DIV to the Beneficial Owner
Prepare a Form 1099-DIV for each beneficial owner whose share of dividends totals $10 or more during the year.2Internal Revenue Service. Instructions for Form 1099-DIV On the new form, you are the payer and the beneficial owner is the recipient. You’ll need their name, address, and Taxpayer Identification Number. Break the amounts out into the same boxes the original payer used on the 1099-DIV you received: ordinary dividends, qualified dividends, and capital gain distributions each go in their matching box.1Internal Revenue Service. General Instructions for Certain Information Returns (2025)
Deadlines
Copy B goes to the beneficial owner by January 31 of the year after the dividend was paid. Copy A goes to the IRS by February 28 if you file on paper, or March 31 if you file electronically.3Internal Revenue Service. Publication 1099 (2026) – Guide to Information Returns Weekend and holiday deadlines roll to the next business day.
Paper filers must include Form 1096 as a transmittal cover sheet summarizing what’s being submitted; Form 1096 is not used for electronic filings.4Internal Revenue Service. About Form 1096, Annual Summary and Transmittal of U.S. Information Returns If you need more time to file with the IRS, Form 8809 gets you an automatic 30-day extension, but it does not extend the January 31 date for furnishing Copy B to the owner.5Internal Revenue Service. About Form 8809, Application for Extension of Time to File Information Returns
The Electronic Filing Threshold
If you file 10 or more information returns of any type during the year, all of them must be filed electronically. The count combines every form type together, so 1099-DIVs stack with W-2s and any other 1099s you file.6Internal Revenue Service. E-file Information Returns A nominee filing one or two forms won’t hit the threshold, but if you also run a business or have employees, check the total.
Back the Nominee Share Out on Schedule B
Sending the 1099-DIV to the beneficial owner does nothing on your own return by itself. You still need to remove that income from your tax return through Schedule B. Schedule B is required whenever you received ordinary dividends as a nominee, regardless of the dollar amount.7Internal Revenue Service. About Schedule B (Form 1040)
In Part II (Ordinary Dividends):
- On Line 5, list each payer and the full amount of ordinary dividends you received, including the portion that belongs to the beneficial owner.
- Below your last Line 5 entry, write a subtotal of everything listed.
- Below the subtotal, write “Nominee Distribution” and enter the total ordinary dividends you passed through to the beneficial owner.
- Subtract the nominee distribution from the subtotal and enter the result on Line 6. That figure carries to Form 1040, Line 3b as your taxable ordinary dividends.
The IRS instructions specify this exact layout: no negative number, just the subtotal, the nominee amount beneath it, and the difference on Line 6.8Internal Revenue Service. Instructions for Schedule B (Form 1040) (2025)
A worked example. You received $5,000 in total ordinary dividends, and $3,000 of that belongs to a beneficial owner. Line 5 shows $5,000. You write a subtotal of $5,000, then “Nominee Distribution — $3,000” beneath it. Line 6 shows $2,000, and that’s the only amount that flows to your Form 1040.9Internal Revenue Service. Publication 550 (2025) – Investment Income and Expenses
Capital Gain Distributions Work Differently
Capital gain distributions received as a nominee are not handled on Schedule B. Report only your own share on Form 1040, Line 7a, or on Schedule D, Line 13, whichever applies to you. Then attach a statement to your return showing the full amount you received and the portion allocated to the beneficial owner as a nominee.9Internal Revenue Service. Publication 550 (2025) – Investment Income and Expenses
On the 1099-DIV you issue to the beneficial owner, put their share of capital gain distributions in Box 2a, matching the box the original payer used. That preserves the preferential long-term capital gains treatment on their return.
If You Can’t Get the Owner’s TIN
You need the beneficial owner’s Taxpayer Identification Number to complete the 1099-DIV. If they refuse to provide one, or provide one the IRS rejects, backup withholding kicks in: you must withhold 24% from the dividend before passing it along.10Internal Revenue Service. Topic No. 307, Backup Withholding The withheld amount is reported on the 1099-DIV and credited against the beneficial owner’s tax when they file. Failing to withhold when required carries its own penalties, so this is not a step to skip.
Penalties for Skipping the Paperwork
Two separate obligations, two separate penalties: filing Copy A with the IRS, and furnishing Copy B to the beneficial owner. Both scale with how late you are. For information returns due in 2026:
- Corrected within 30 days of the deadline: $60 per form.
- Corrected after 30 days but by August 1: $130 per form.
- Filed after August 1 or never filed: $340 per form.
- Intentional disregard: $680 per form, with no annual cap.
Because the amounts apply separately to the IRS filing and the payee copy, missing both on the same form doubles the exposure.11Internal Revenue Service. Information Return Penalties And the paperwork penalty is often the smaller problem. Skip the nominee reporting entirely and the IRS sees the full dividend amount attributed to you, with nothing on your return explaining where the other person’s share went. You then get taxed on income that was never economically yours, and unwinding that through a notice takes far more effort than filing the forms on time.