I received a 1099-int from a bond I cashed in, post-divorce. The bond was purchased under my name alone so the 1099-int only has my name and SSN/Tax ID on it. I had to give half the proceeds to my ex-spouse because it was purchased with marital money, so the taxes due must be split 50/50.
My understanding is I am the "Nominee Recipient" of the 1099-int.
The procedure as I understand it would be:
1) Create a new 1099-int listing me as the payer and my ex spouse as the recipient for their share (50%).
2) Provide this new 1099-int to my ex spouse
3) Send the new 1099-int I created to the IRS with form 1096 (listing myself as the nominee filer)
This brings up a bunch of issues and questions for me...
1) Am I missing anything in the above? Is a step missing? Am I wrong?
2) Do I have to generate a new 1099int for myself also? (reflecting my 50%)
3) I can't print out the 1099int website pdf because it's not the genuine "red ink" version. I did order a copy from the IRS but not sure when it will arrive. Is there a way to have TurboTax deluxe generate this form 1099-int and efile/submit it to the IRS for me so I don't need form 1096 and a red ink original 1099-int?
No. You don't need to create a separate 1099 for your spouse. The IRS considers interest income from jointly owned property to be shared equally between spouses, even if divorced. you can report half of the interest income on your tax return and the other half may be reported on your spouse's tax return.
Thank you so much!
So it's sufficient to use the 1099-int that is solely in my name and do the following:
1) I enter it into Turbo tax for 50% of the interest earned
2) Ex spouse (who has a copy of the 1099) will enter it with 50% of the interest earned
That's it?
I dont want to set an alarm that results in an audit (because I know a copy of the 1099 was sent to the IRS) but I'm only reporting half. Of course if I am audited, I can say exactly what you just said to the IRS....
No, this shouldn't set any alarm bells at all. I base my opinion from IRS publication 555, which states that any property acquired while married is community property regardless of your present marital status.
I took a look at that publication and it seems to be applicable to community property states only? I'm not in one. Does it matter?
The IRS will look at your tax return which reports nominee interest to the ex and then look at their return for a match. If the ex doesn't report it and there is no 1099-INT issued, then you get the whole bill. I would do the 109-INT as a matter of precaution. Many people would not.
You can easily file with Quick Employer Forms.