Married Filing Sperate with 1099-INT

[Diesel65]

Hey,

My wife and I are filing married but separate for student loan purposes. 

State: South Carolina

We have will have 2 1099-INT: a joint account and an account only in my name. 

My understanding is that the joint account I will do a nominee distribution. Since the distribution is with my spouse, we are not required to file a 1096 & 1099. Correct? 

The account under my name is technically both of our assets. My wife is not an account owner but is a POD beneficiary. Do I have to file this as a nominee distribution, or can I claim all the interest? 

[xmasbaby0]

When you file married filing separately you both have to use standard deduction or both use itemized deduction.  But you can have different kinds of income on each spouse's return.   You can put the interest on your return if you both agree to that.   You are not in a community property state so that is not an issue.

[Diesel65]

Follow up question:

Is this only specific to the single account ownership or a joint ownership? I would prefer to claim all the 1099-int for single and joint accounts on my return as I am in a lower tax bracket. 

[LindaS5247]

One rule of thumb is the person who's Social Security number is on the 1099-INT will report it, or the person who is listed first on the account for which the 1099-INT is issued will report it.

Another method:

If you’re married but filing separately, since each spouse is filing a separate return, you’ll divide the interest income between each account holder.

The IRS treats the division of income on joint accounts based on your local (state) laws. You need to know how your state divides assets.  This can be found on your state's income tax website or by googling your state and how income is divided.

Then, use those rules to determine who'll claim the interest.

For those that live in a community property state, each person reports half of the interest income on their individual returns.

For those that don’t live in community property state, you will have to divide the interest income based on your portion of ownership of the account throughout the year.