4.9 Who Reports the Dividends

Stock held by broker in street name.

If your broker holds stock for you in a street name, dividends earned on this stock are received by the broker and credited to your account. You report on your 2012 return all dividends credited to your account in 2012. The broker is required to file an information return on Form 1099 (or similar form) showing all such dividends.

If your statement shows only a gross amount of dividends, check with your broker if any of the dividends represented nontaxable returns of capital.

Dividends on stock sold or bought between ex-dividend date and record date.

Record date is the date set by a company on which you must be listed as a stockholder on its records to receive the dividend. However, in the case of publicly traded stock, an ex-dividend date, which usually precedes the record date by several business days, is fixed by the exchange to determine who is entitled to the dividend.

The dividend declaration date and date of payment do not determine who receives the dividend.

Nominees or joint owners.

If you receive ordinary dividends on stock held as a nominee for another person, other than your spouse, give that owner a Form 1099-DIV and file a copy of that return with the IRS, along with a Form 1096 (“Transmittal of U.S. Information Return”). The actual owner then reports the income. List the nominee dividends on Schedule B (Form 1040 or Form 1040A) along with your other dividends, and then subtract the nominee dividends from the total.

Follow the same procedure if you receive a Form 1099-DIV for an account owned jointly with someone other than your spouse. Give the other owner a Form 1099-DIV, and file a copy with the IRS, along with a Form 1096. The other owner then reports his or her share of the joint income. On your return, you list the total dividends shown on Forms 1099-DIV and avoid tax by subtracting from the total the nominee dividends reported to the other owner.