Nominee Distribution

AAA

DEFINITION of 'Nominee Distribution'

Interest income reported on IRS Form 1099-INT that a taxpayer designates as being the interest income of a different individual. A taxpayer may choose to make a nominee distribution if s/he jointly owns an account with someone who is not his/her spouse and the financial institution where the account is located reports all the interest earned on that account as being earned by only one of the account holders.

INVESTOPEDIA EXPLAINS 'Nominee Distribution'

The taxpayer who received the 1099-INT from the financial institution uses Schedule B, Interest and Ordinary Dividends, to report the entire amount. Below that the taxpayer writes "nominee distribution" and enters the amount of interest that really belongs to the other account holder. By subtracting the nominee distribution, the taxpayer avoids paying tax on interest income that isn't really his/hers. The rightful owner pays the tax instead.

RELATED TERMS
  1. Individual Tax Return

    The type of tax return filed by an individual. Both single and ...
  2. Form 1099-INT

    The form issued by all payers of interest income to investors ...
  3. Nominee Interest

    An interest payment that a person receives on behalf of someone ...
  4. Interest

    1. The charge for the privilege of borrowing money, typically ...
  5. 1040A Form

    A simplified version of the 1040 form for individual income tax. ...
  6. Duty Free

    Goods that international travelers can purchase without paying ...
RELATED FAQS
  1. What is the difference between comprehensive income and gross income?

    Comprehensive income and gross income are similar, but comprehensive income is a specific term used on a company's financial ... Read Full Answer >>
  2. What tax breaks are afforded to a qualifying widow?

    The tax breaks accorded to qualifying widows or widowers include being able to use a tax filing status that allows for a ... Read Full Answer >>
  3. How is income taxed on prorated salary?

    Since yearly income is viewed by the Internal Revenue Service (IRS) as the total amount of income a person has made over ... Read Full Answer >>
  4. How can I tell which of my business expenses count as write-offs?

    Any basic, reasonably necessary expenses incurred in running a business can be considered possible write-offs. Such expenses ... Read Full Answer >>
  5. What is the difference between a write-off and a deduction?

    There is no difference between a tax write-off and a tax deduction. It's possible that the confusion arises between a tax ... Read Full Answer >>
  6. What is the difference between taxable income and gross income?

    Gross income includes all of the income a person receives during a year that is not explicitly exempt from taxation, whereas ... Read Full Answer >>
Related Articles
  1. Economics

    Forces Behind Interest Rates

    Get a deeper understanding of the importance of interest rates and what makes them change.
  2. Taxes

    Reporting Your Interest Income

    Find out how your accounts are taxed and which forms you need.
  3. Investing Basics

    What Investors Should Know About Interest Rates

    Understanding interest rates helps you answer the fundamental question of where to put your money.
  4. Taxes

    What's a Tax Shield?

    A tax shield is a deduction, credit or other means used to reduce the amount of taxes an individual or business owes to the government.
  5. Taxes

    What's an Indirect Tax?

    An indirect tax is levied on goods or services rather than on an individual or a company.
  6. Taxes

    Understanding Excise Taxes

    An excise tax is an indirect levy charged for the sale or use of a particular item.
  7. Taxes

    Understanding the W-2 Form

    The W-2 Form is a standard Internal Revenue Service (IRS) form that employers are required to furnish employees at the end of each year.
  8. Taxes

    IRS Refund Lost? Here's What to Do

    Don't panic. There are a number of reasons your refund might be delayed – and solutions for each.
  9. Economics

    What's a Deductible?

    With insurance, a deductible is the amount of money the insured pays out-of-pocket before the insurance company pays for the loss.
  10. Taxes

    Explaining Taxable Income

    Taxable income is the net of gross income and allowable deductions.

You May Also Like

Hot Definitions
  1. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  2. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  3. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  4. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  5. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  6. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!