Level 3

Question

Nominee interest income

Forum|Forum|1 year ago
May 2, 2025
3 replies
17 views

A client will be receiving a 1099-INT in 2025. However, the interest will be split 50/50 with her sister.

I understand my client has to send the IRS a 1099-INT with her sister's information and her share of the interest.

My question is as follows: does my client only claim half of the 1099 interest on her tax return? That seems to lead to a letter from the IRS regarding the other half?

I seem to remember there was once a way to claim all the interest, and then deduct "nominee interest" on Schedule B.

Comments please!

Thank you!

ProSeries Professional

This topic has been closed for replies.

rbynaker

Level 13

If you double-click on the line in the Sch B worksheet it should take you to the Additional Information screen where you can enter the nominee amount. Then it should present as you expect on the Sch B.

Rick

Just-Lisa-Now-

Intuit Community Champion

"I understand my client has to send the IRS a 1099-INT with her sister's information and her share of the interest."

No, your client doesnt issue a 1099INT to the other person.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

rbynaker

Level 13

While I suspect the compliance rate is well under 5%, here's what the IRS instructions say:

1099 General Instructions

Nominee/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 must also furnish a Form 1099 to each of the other owners.

The only one I've ever prepared is with me as the Payer on an account where I'm primary.

Just-Lisa-Now-

Intuit Community Champion

Wow, Ive neve done that or seen anyone come in with a nominee 1099INT from someone else, I do have multiple people that report interest that was nomineed to them by a joint account holder.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪

George4Tacks

Level 15

@acitrola Is this a joint account with both names on it?

-OR-

Is this one account with one name and an understanding that they share the interest?

Answers are easy. Questions are hard!

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