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What to do with interest income received for someone else.

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Author Trudy Howard #smallbiztaxlady

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DID YOU OPEN A CHECKING/SAVINGS ACCOUNT IN YOUR NAME FOR A FAMILY MEMBER?
While we typically see this in cases where a person owes back child support, I have seen cases where a person was in chexsystems, had bad credit, or was simply incapable of handling their finances.
If the checking/savings account pays interest of $10 or more, a 1099-INT statement will be issued in the name of the account holder. When a person receives a Form 1099 for interest in their name that actually belongs to someone else, the IRS considers that person a nominee recipient.
If you received a Form 1099-INT or Form 1099-OID that includes an amount you received as a nominee for the real owner: you must give the actual owner a Form 1099-INT (unless the owner is your spouse) and file Forms 1096 and 1099-INT with the IRS.

Although we’ve given you the basics, this is not an all inclusive article. Should you have questions, or need business tax preparation, business entity creation, business insurance, or business compliance assistance please contact us online, or call our office at 855-743-5765. Make sure to join our newsletter for more tips on reducing taxes, and increasing your wealth.

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