topic Re: Co-trustee income split in Retirement tax questions

Co-trustee income split

pogoclarke — Mon, 24 Feb 2025 14:36:14 GMT

I am a co-trustee of a Trust which has a brokerage acct listed in my name as Primary trustee. The broker issued a 1099-DIV, the total of which is showing up in TurboTax as my income. I only want to report my share (1/6). How will the IRS treat that discrepancy?

Re: Co-trustee income split

DianeW777 — Mon, 24 Feb 2025 15:04:47 GMT

It depends. You should adjust your tax return by changing the income to only your share (1/6). You can nominee the remaining amount to each beneficiary. Or transfer it all to the trust where it can be divided on each K1 submitted to each beneficiary. This is called nominee and the process is shown below.

Nominee Returns. This is how the IRS knows what you are doing.

Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received). You must also furnish a Form 1099 to each of the other owners.

File the new Form 1099 with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)

On each new Form 1099, list yourself as the payer and the other owner, as the recipient. On Form 1096, list yourself as the nominee filer, not the original payer. The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.

The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here:

Re: Co-trustee income split

pogoclarke — Mon, 24 Feb 2025 15:41:01 GMT

Thank you for the info; much appreciated.

Each year I create a report for the Trustees showing the 1099 information I receive which they give to their accountants. I also include this report with my yearly 1041 filing for the Trust.

The Trustees' accountants have never asked me to produce nominee 1099's. Might this be because they are using my document as a substitute 1099?

Re: Co-trustee income split

DianeW777 — Mon, 24 Feb 2025 15:48:55 GMT

It's possible. They might consider this in the future so that you do not have this situation on your tax return. You should consider bringing this to their attention for future use or handle it on your own, whatever is best for you.