My partner and I are registered domestic partners in California. We have a joint brokerage account at Vanguard. I'm the first person listed on the account, so Vanguard issues a Consolidated 1099 to me.
Let's just assume for simplicity that the only community property income we have is $1000 Qualified Dividends reported on 1099-DIV. I understand we each need to file Form 8958, and split the dividends 50/50.
On TurboTax, I downloaded 1099-DIV from Vanguard directly, so initially TurboTax considered the entire $1,000 to be my income. Toward the end, when I got to Community Property questions, I entered minus $500 on the "Community Property Income Adjustments" screen. TurboTax then put down -$500 in Schedule 1 line 8 (which flows to Form 1040 line 8), but TurboTax didn't adjust Form 1040 line 3a (Qualified dividends). Is this the correct way of doing it? It doesn't sound right because I should be taxed as if I received $500 QDI, not $1000 QDI. Was I supposed to manually enter the 1099-DIV with only half the amount? (but then TurboTax would reduce yet another $500 of my income on line 😎
Thank you. I read that if one is splitting 1099-DIV/-INT/-B/etc. with another person (e.g., a joint account), the person named on 1099 has to issue a 1099 to the other person and also send a copy to IRS. Since we will be filing Form 8958 and explaining to IRS why and how we are splitting our income between the two of us, we don't need to follow that nominee procedure, do we? Thanks!