I'm so glad you asked.... this is a confusing topic for a lot of people! I can't really give you a short answer without more details, but here's some helpful information.
It depends mainly on what type of account this is. Is it a joint account? Or a custodial account?
If it's a custodial account The IRS considers the minor child the owner of the account, so the earnings in it are taxed at the child's tax rate, if at all. The account would have the child's social security number, and the 1099-INT would be sent to your grandson. As long as the total of all unearned income (interest, dividends, etc) doesn't exceed $1150, then he would not need to file a return. Sounds like that would be the case this year. In the future, if the total exceeds $1150 then his parents can either include his income on their return, or file a separate return for him. Assuming that the parents are in a higher tax bracket than the child, it may make more sense to file a separate return for him. (Any income greater than $2300 would be taxed at the parent's rate.)
If its a joint account, then the account would have your social security number on it, and the 1099-INT would be filed to you, and you would be liable for taxes on the interest.
Hope that helps! Thanks for participating today.
