I have the issue where mother purchases savings bond issued as co-owners in the names of both mother and daughter. When the bond matured, daughter redeemed/cashed it. Daughter then received a 1099-INT for the taxable interest. IRS Pub 550 seems pretty clear that mother is the one who owes the tax. In this case, daughter is in a much higher tax bracket than mother so it is also preferable for mother to pay the tax.
My question is about the 3rd paragraph below - snipped from IRS Pub 550. It seems that daughter needs to issue the mother a 1099-INT. She also needs to submit that 1099-INT and a 1096 to the IRS. Is there a way to do this electronically? If so, is it the IRS FIRE system here?https://www.irs.gov/e-file-providers/fi ... cally-fire
My question is about the 3rd paragraph below - snipped from IRS Pub 550. It seems that daughter needs to issue the mother a 1099-INT. She also needs to submit that 1099-INT and a 1096 to the IRS. Is there a way to do this electronically? If so, is it the IRS FIRE system here?https://www.irs.gov/e-file-providers/fi ... cally-fire
Co-owners: If a U.S. savings bond is issued in the names of co-owners, such as you and your child or you and your spouse, interest on the bond generally is taxable to the co-owner who bought the bond.
One co-owner's funds used: If you used your funds to buy the bond, you must pay the tax on the interest. This is true even if you let the other co-owner redeem the bond and keep all the proceeds. Under these circumstances, the co-owner who redeemed the bond will receive a Form 1099-INT at the time of redemption and must provide you with another Form 1099-INT showing the amount of interest from the bond taxable to you. The co-owner who redeemed the bond is a “nominee.” See Nominee distributions, later, for more information about how a person who is a nominee reports interest income belonging to another person.
File Form 1099-INT with the IRS: If you received interest as a nominee in 2022, you must file a Form 1099-INT for that interest with the IRS. Send Copy A of Form 1099-INT with a Form 1096, Annual Summary and Transmittal of U.S. Information Returns, to your Internal Revenue Service Center by February 28, 2023 (March 31, 2023, if you file Form 1099-INT electronically). Give the actual owner of the interest Copy B of the Form 1099-INT by January 31, 2023. On Form 1099-INT, you should be listed as the “Payer.”
Statistics: Posted by clobber88 — Mon Feb 05, 2024 9:35 pm — Replies 1 — Views 149