Joint account 1099-INT

[ranbre102]

Opened checking account with mother years ago. Given that I was a minor, she needed to sign as co-owner. This is the first time receiving interest and my mother got a 1099-INT since i hit exactly $10 threshold and she is listed as primary. Since all the money in that account has always come from me (direct deposits from work), do I need to file the 1099 under my name as a nominal interest and have her list me on her return or could she still go ahead and just pay taxes on those $10? and if so, how to do so on turbotax? Also, is there any gift tax to be concerned about on this joint account if all income has been earned and withdrawn by me.

[KarenJ2]

You can either have your mom pay the tax on the $10 interest or you could file it under your name as a nominee.

The easiest way forward would be to just have your mom report the income on her return as her SSN is on the form.

Gift tax return must be filed by the person giving the gift of income not by the person that received the money.  For 2019, a gift of more than $15,000 triggers the need for a gift tax return.

[ranbre102]

Thank you for the information/help!

Regarding the gift tax, if all the deposits and withdrawals are made by me alone and not my mom would that still count as a "gift"? (note: the account was opened together when i was a minor and no deposits made by her)

[ThomasM125]

Since the deposits are made by you, then there would not be any gift tax issues here.

[ranbre102]

Thanks for the timely response. Given that all deposits are made by me (through means of direct deposit of my employers) should my parent still file the $10 1099 int given that its under her SSN for simplicity? 

[ThomasM125]

It is clearly your income, so you should report it on your tax return. 

[ranbre102]

Great, thank you. This is what I thought too. Do you happen to know how to do this using TurboTax for both of us?

[ThomasM125]

On your return, you enter the form 1099-INT in the federal section of TurboTax, then "Income and Expenses", then  "Interest and Dividends", then "Interest on 1099-INT."

On your mother's return, you have the option to simply not report it, since the income is minimal and not reportable anyways, since it's not her income.

Or, if you're concerned about getting in trouble for not reporting it since it has your mother's social security number on it, you can report it the same way and it will have a minimal impact on her tax liability.

[ranbre102]

Thanks @ThomasM125 !

One follow up question, i was under the impression that when my mother reports the 1099 on her return as a nominee she would need to file a new 1099 with me as the "recipient" along with a 1096. Is this still the case for my specific situation? If it is, is it possible through TurboTax?

[DMarkM1]

If you are speaking about your mother filing a 1099-misc that does not seem to apply here.  The rules are:

File Form 1099-MISC, Miscellaneous Income, for each person in the course of your business to whom you have paid the following during the year:

• At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.

or

• At least $600 in:

1. Rents (box 1);

2. Prizes and awards (box 3);

3. Other income payments (box 3);

4. Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3);

5. Any fishing boat proceeds (box 5);

6. Medical and health care payments (box 6);

7. Crop insurance proceeds (box 9);

8. Payments to an attorney (box 10) (see Payments to attorneys, later);

9. Section 409A deferrals (box 12); or

10. Nonqualified deferred compensation (box 14).

You may close the current account and open an account in your name and have the deposits go to the new account going forward since it appears it's all your account already.  

[DMarkM1]

If you are speaking about your mother filing a 1099-misc that does not seem to apply here.  The rules are:

File Form 1099-MISC, Miscellaneous Income, for each person in the course of your business to whom you have paid the following during the year:

• At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.

or

• At least $600 in:

1. Rents (box 1);

2. Prizes and awards (box 3);

3. Other income payments (box 3);

4. Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3);

5. Any fishing boat proceeds (box 5);

6. Medical and health care payments (box 6);

7. Crop insurance proceeds (box 9);

8. Payments to an attorney (box 10) (see Payments to attorneys, later);

9. Section 409A deferrals (box 12); or

10. Nonqualified deferred compensation (box 14).

You may close the current account and open an account in your name and have the deposits go to the new account going forward since it appears it's all your account already.  

[ranbre102]

I was referring to this: https://www.irs.gov/instructions/i1099gi#idm140119320878080  (nominee and middleman returns): "Generally, if you receive a Form 1099 for amounts that actually belong to another person, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received) for each of the other owners showing the amounts allocable to each. You also must furnish a Form 1099 to each of the other owners. File the new Form 1099 with Form 1096 with the Internal Revenue Service Center for your area."

Since the 1099-INT is on her SSN but the interest is from my income and i will be filing under my name/ssn. 

[AmyC]

The IRS has a $25 tax liability rule where things like this can slide. The tax liability on this $10 is less than $25 so how it is handled is not of huge interest to the IRS. A paper trail is sufficient in this case.

• Your mom should report it so she doesn't get a letter saying that she did not report it.
• She can do the nominee to you so it is not taxable.
• Then you can file on your return.

[ranbre102]

Thank you @AmyC ! Is it possible to do the 2nd step you have listed  through turbotax (She can do the nominee to you so it is not taxable).

She received this 1099 after filing so she will need to amend her return to include this, could i file my return before so? 

Thanks all for all the help!

[mil8tem]

If Mom's Soc Sec # is on the 1099-INT statement, then it needs to be on the Tax Return that matches that SocSec#.  Going forward, contact the bank and get YOUR name and SocSec# as primary account.