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Joint Accounts and Tax

My wife (NJ resident) and her sister (PA resident) have a joint brokerage account designated JTWROS.  Her sister is the primary account holder, gets the 1099 and pays the taxes on the interest/dividends on the account.  Is this proper wrt state and federal income tax?  If not, what is the proper way to move the money into separate accounts?

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1 Reply
Hal_Al
Level 15

Joint Accounts and Tax

It is OK to do it the way they are doing it, if they are in agreement to do so.

 

The proper way is for the sister to report the whole 1099-INT amount on her return and then take a deduction for "nominee" amount (presumably half the interest).  In TurboTax (TT), the sister will get a screen asking if she needs to adjust the amount.  The deduction goes on Schedule B and is not an itemized deduction. 

 

You wife enters her share of the interest at the 1099-INT screen, in TT, even though she did not actually get a 1099. 

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