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. 1040A Form

    A simplified version of the 1040 form for individual income tax. ...
  4. Interest

    1. The charge for the privilege of borrowing money, typically ...
  5. Nominee Interest

    An interest payment that a person receives on behalf of someone ...
  6. Deferred Tax Asset

    A deferred tax asset is an asset on a company's balance sheet ...
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

    How much will it cost to hire an accountant to do my taxes?

    Find out how much it costs to hire an accountant and what benefits and services you can expect from your accountant.
  5. An article explaining the Federal Tax Brackets, how and why they were stablished, what is the logic behind them and where an user can find the most current ones
    Taxes

    Federal Tax Brackets

    Why do we have income tax brackets? What do they do for us? Read this to understand the basics and where to find your own bracket.
  6. Taxes

    After-Tax Balance Rules For Retirement Accounts

    Accumulating post-tax assets can work to your advantage. Find out how.
  7. Taxes

    Changes In Tax Legislation And Regulation

    Keeping on top of these amendments can help you avoid penalties and take advantage of benefits.
  8. Taxes

    10 Sources Of Nontaxable Income

    Taxes are often a deterrent from investing and saving. These financial practices will bring you no tax grief.
  9. Taxes

    Tax Treatment Of Roth IRA Distributions

    Learn the requirements for withdrawing funds tax and penalty free.
  10. Retirement

    What aids will help me file my own tax return?

    Most of us will shy away from doing our own tax returns, especially if it involves reporting capital gains or losses, education expenses or deducting interest paid on mortgages, and we prefer ...

You May Also Like

Hot Definitions
  1. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  3. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  4. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  5. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  6. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
Trading Center