Bank interest distribution on a Joint account when Married Filing Separately in Connecticut

[AnthonyC6]

Since Ct. is an equitable distribution state and not a community property state,  can we divide the bank interest any way we wish on the federal return when married filing separately?    If so, how is it done using TurboTax?   The joint bank account has me on the 1099-INT as the primary without listing my wife. The interest division has state tax implications in CT.

Thank you.

[DMarkM1 · Accepted solution]

Yes, you can divide however you agree.  Typically, the division is based on percent of investment.  You will enter the 1099-INT just as you received it.  Indicate the bank name and that the interest belongs to you.  After entering, you will be asked "Do any uncommon situations apply?"  Select the box for "I need to adjust the interest."  Enter the amount that belongs to your spouse as a positive number and select that "you received interest that belongs to someone else." 

In you spouse's return she will report the amount as interest received from you.  She puts your name instead of the bank name for the "Received from" box.  Investment interest divided between spouses does not require you to issue a 1099-INT.   

[AnthonyC6]

Can you also distribute joint 1099-Dividends and joint Capital Gain distributions any way we agree upon when MFS in Connecticut?

Lastly, is a Capital Carry Over Loss distributed evenly or as we choose?

Thank you for the information and your expertise.

[AmyC]

1. You are not in a community property state. In other states, not community property, gains on assets that are jointly held can be allocated any way you like. 

2. Gains  and losses on assets held in one name only must be reported on the owner's tax return. If it is joint, distribute as you choose.

[AnthonyC6]

I don't understand.  AmyC seems to be saying that in a community property state, the division is any way you want???   

This contradicts DMarkM1 where he wrote that the joint interest on the 1099-INT can be divided any way we want in an equitable distribution state  (CT.).   My name only appears on the 1099INT as the primary even though it's a joint bank account.  It's my understanding that the bank only puts the primary on the statement of a joint account.  

We are not in a community property state where it's my understanding the division would be 50-50 on the interest income, not any way you want.

This brings me to the 1099B.  Our 1099 dividends and capital gains are shown jointly owned on our 1099-B statement.  Like the joint 1099-IINT,  can these gains be divided any way we want in Connecticut, an equitable distribution state?

Lastly, can a joint  Capital Carryover Loss be divided any way we want in an equitable distribution state?

Please clarify.  Thank you.

[AmyC · Accepted solution]

I am sorry for the misunderstanding. Community property is 50-50. I was saying since you are not in community property, you can divide things however you like. The 1099-Int and 1099-B are both joint, so they can be divided however you want. The capital loss carryover has a limit of $1,500 each for MFS.

@DMarkM1 thanks for confirming our agreement prior to my answering here.

[AnthonyC6]

Thank you for affirming that in joint accounts the income can be divided any way we want when filing MFS in an equitable distribution state.