1099-DIV Nominee adjustments

[2Travelers]

My Form 1099-DIV has amounts in boxes 1a, 1b, and 5.   I fill in all amounts and <Enter>  On the next screen I checked the box for "I need to adjust these dividends" <Enter>.   On the next screen I entered the adjustment amount for Ordinary Dividends.    (Instructions state that the percentage of adjustment amount will be applied to all other amounts on the form)

 When carried over to Schedule B:   Part II    The Adjustment shows up to Ordinary Dividends as expected with "Nominee Distribution" as the explanation. 

PROBLEM:   When the amount in Box 5 (199A Dividends) is shown on Form 8995, there is no place to show an adjustment to that amount.    It shows the entire original amount, with no adjustment.    

(I understand that the amount in Box 5 is already included in total dividends, but it seems that for this calculation the amount should be adjusted separately.)

Anyone have experience with this?

[DianeW777]

You should make the adjustment and enter the adjusted amount in Box 5.  This will make the entry and the tax return accurate.  Keep the information with your tax records.

If you choose you can do a physical nominee of the distribution on Form 1099-DIV (not necessary) so that the IRS has the recorded amounts attributable to you and the other person. As long as you keep your records and the other person is reporting their share, you can just keep the details with your tax records should you need them later.

Nominee Returns.

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.

If you choose this one here is the TurboTax program for creating 1099s.

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: 

• Form 1096-Transmittal
• Form 1099-DIV

@2Travelers

[Edited: 03/15/2022 | 12:24p PST]

[2Travelers]

The amounts I enter into the 1099-DIV screen must match exactly the amounts on the 1099-DIV received from the investment company.    I cannot just "adjust" the amount in box 5 of the 1099-DIV screen.   

Also, I have already issued 1099's for the distribution of the nominee amount. 

[JamesG1]

In TurboTax Online Premier version, I am able to enter an IRS Form 1099-DIV with the same amount in boxes 1a, 1b and 5.  I enter a nominee dividend adjustment at the screen Tell us about your dividend adjustment.

The correct amount (gross amount minus nominee distribution) is reported:

• On the Federal 1040 lines 3a and 3b, and
• On the Federal 1040 Schedule B Interest and Ordinary Dividends Part II.

My example is reporting an IRS Form 8995 Qualified Business Income Deduction Simplified Computation.  In my example, the correct amount is reported on line 12 Net capital gain.  Is this the entry that you are not seeing reported correctly?

[2Travelers]

Thank you very much for your reply.

Your example is exactly as I entered and I agree that the correct amounts  are reported on:

• Form 1040 lines 3a and 3b
• Form1040 Schedule B Interest and Ordinary Dividends Part II
• Form 8995 Line 12

The question I have is Form 8995, Line 6.   The amount  on Line 6 is the exact amount entered on the 1099-DIV and shows no adjustment.     Should this amount be adjusted by the same percentage as all of the other amounts on the 1099-DIV?

On Form y example is reporting an IRS Form 8995 Qualified Business Income Deduction Simplified Computation.  In my example, the correct amount is reported on line 12 Net capital gain.  Is this the entry that you are not seeing reported correctly?

[JamesG1]

I am also seeing the full amount of the dividend income on line 6 of IRS Form 8995 Qualified Business Income Deduction Simplified Computation.

Unfortunately the IRS Form 8995 Instructions are not helpful.  The description for line 6 states:

Line 6

Enter income as a positive number and losses as a negative number.

However, when I make the adjustment recommended by DianeW777 above, the correct amounts are reported on:

• the Federal 1040 lines 3a and 3b, and
• on the Federal 1040 Schedule B Interest and Ordinary Dividends Part II, and 
• on the IRS Form 8995 Qualified Business Income Deduction Simplified Computation.

Above DianeW777 states:

You should make the adjustment and enter the adjusted amount in Box 5.  This will make the entry and the tax return accurate.  Keep the information with your tax records.

This is also the advice from Learn more to the right of Adjustment amount at the screen Tell us about your dividend adjustment.

We're assuming you want to adjust the total income from dividends and capital gains from your 1099-DIV by entering a dividend adjustment amount.

If this is not what you want, select Back, adjust the amount of each separate income item, and uncheck the adjustment choice. Be sure to attach a statement to your return explaining each adjusted amount.

[2Travelers]

Ok, so I'm still not sure if Turbo Tax is correct or incorrect in how it carries over Box 5 from the 1099-DIV to the Form 8995 (i.e.   Turbo Tax does not adjust the amount)

If I decide to go with the the presumption that it is not correct, I will manually change the amounts on the 1099-DIV entry.  

Thank you again for your help.