Nominee Distribution


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.

BREAKING DOWN '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.

  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. Interest

    1. The charge for the privilege of borrowing money, typically ...
  4. 1040A Form

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

    An interest payment that a person receives on behalf of someone ...
  6. Duty Free

    Goods that international travelers can purchase without paying ...
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. Economics

    Explaining Fair Market Value

    Fair market value is the price at which a buyer and seller are willing to exchange a good.
  5. Taxes

    What IRS Form 1023 Is Used For

    To be treated as a tax-exempt organization, start by filling out this form.
  6. Taxes

    Late with Your Taxes? Grab IRS Form 4868

    Fill out this form to get a few more months to file your tax return. But remember, April 15 is still the payment due date if you owe taxes.
  7. 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.
  8. Taxes

    What's an Indirect Tax?

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

    Understanding Excise Taxes

    An excise tax is an indirect levy charged for the sale or use of a particular item.
  10. 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.
  1. Do financial advisors prepare tax returns for clients?

    Financial advisors engage in a wide variety of financial areas, including tax return preparation and tax planning for their ... Read Full Answer >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. 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 >>

You May Also Like

Hot Definitions
  1. Ex Works (EXW)

    An international trade term requiring the seller to make goods ready for pickup at his or her own place of business. All ...
  2. Letter of Intent - LOI

    A document outlining the terms of an agreement before it is finalized. LOIs are usually not legally binding in their entirety. ...
  3. Purchasing Power

    The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy. Purchasing ...
  4. Real Estate Investment Trust - REIT

    A REIT is a type of security that invests in real estate through property or mortgages and often trades on major exchanges ...
  5. Section 1231 Property

    A tax term relating to depreciable business property that has been held for over a year. Section 1231 property includes buildings, ...
  6. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
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!