After Divorce keeping joint mutual fund account

[yesimk]

We still keep and intend to keep a joint ownership of a mutual fund account with my ex-husband after divorce in 2021.  Since filing separately, how are we supposed to show the joint 1099-DIV in our tax returns?  Also, does it matter that my ex-husband is the first holder on the joint account? Thank you.

[LeonardS]

Each of you will report your share of the 1099-DIV per your divorce agreement on your tax return.  No, it does not matter that your ex-husband is the first holder on the joint account.

[Critter-3]

If one person's SS# is on the tax forms then the IRS will expect ALL of the income to be reported on their return which can cause headaches in the future with the IRS since you can nominee interest and dividends but not stock sales.   The correct reporting will take time and effort so it would be wise to get the account split between the 2 of you by the broker so you each get your own tax reporting form and avoid IRS audit letters in the future. 

[Mike9241]

per the iRS

Nominees. If this form includes amounts belonging to another person(s), you are considered a nominee recipient. Complete a Form 1099-INT (div or other form)  for each of the other owners showing the income allocable to each. File Copy A of the form with the IRS. Furnish Copy B to each owner. List yourself as the “payer” and the other owner(s) as the “recipient.” File Form(s) 1099-INT with Form 1096 with the Internal Revenue Service Center for your area. On Form 1096, list yourself as the “filer.” 

[yesimk]

Thank you for your reply.  I have to say that only my ex-husband's SSN is the Recipient's TIN on the account although it is a joint account.  

I'd like to ask:

* Our divorce agreement did not specify how to divide the investment account.  However, we intend to do 50-50.  Can each of us report like that on our tax return?

*  Also, 1099-DIV includes both dividends and capital gain distributions.  We will be dividing both of them, right in the 1099-DIV Boxes?

* Finally, in TurboTax, under "Tell us if any of these uncommon situations apply to you", there is a situation: "I need to adjust these dividends".  Does each one of us also need to adjust these dividends by checking the box "I received all or part of these dividends for someone else (I am a nominee)?  I am confused here, because since his SSN is as the recipient's TIN on 1099-DIV, does he need to file Form 1096 with the IRS?

Thank you again.    

[MarilynG]

Yes, if your husband's SSN is shown on your 1099 forms, he can enter them as shown in his return and choose the 'nominee' option to report his share of the income, and file Form 1096 to the IRS. 

You will enter the interest and dividends 'as if' you received a Form 1099 for your portion only (whether your husband actually issues you one or not), so you don't need to indicate any adjustment on your return.

Click this link for more info on Nominee Adjustments. 

[yesimk]

What about the capital gain distributions on 1099-DIV?  Does he need to adjust for those as well in the adjustment section? Thanks again.

[DianeW777]

Yes.  You must divide the capital gain number in half before you enter it in the 1099-DIV entry.  You should also put the nominee distribution on the next screen as an adjustment. Provided here is the information for doing the physical nominee action for the IRS to eliminate any question about each return.

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-B
• Form 1099-DIV
• Form 1099-INT

@yesimk