I have a real estate fund which is one of the investments held in my brokerage account. Normally I receive all the 1099’s from my broker (Fidelity). For this fund, I received one from both the broker and the fund itself.
Both have the same total income but one has it all as non-dividend distributions (the fund) and the other has it split between non-dividends and regular dividends (the broker). It seems so far that the one issued by the fund is correct but I’m waiting for confirmation.
My question: Even after I determine the correct one, how do I report two 1099’s for income from the same investment? The IRS received both 1099’s. Does it expect both to be reported? That would be double taxation.
You won’t have to pay tax on both, but if both were reported to the IRS, the proper way to report may be to show both on your form, along with negative numbers to zero out one of them, with an accompanying explanation. Showing both will avoid the automatic flagging of your return for failing to report an item that has been reported to the IRS.
I think that the IRS computer will flag the one with negative numbers because it’s different than the 1099 that it received. Also I don’t know how to write an explanation on an electronically summited return. I probably would get a notice some time down the line and would have to then deal with it. Of course I want to avoid that.
I just thought of a simpler solution, if its possible: If it’s resolved that my broker’s 1099 is incorrect, do you think that they would be willing to send the IRS an amended 1099 with all zero income?