Hi, I really need some help figuring out this situation:


If two people (A and B) jointly owns a CD and A is the principal holder of the account:

Which of the following is true:

a) Both A and B are liable for the taxes on half of the interest from the CD

b) A is liable for all of the taxes as the principal holder

c) the taxes are calculated based on the amount that A and B contributed to the account

d) the taxes are based on the interest sharing agreement made between A and B


Thank you for any help.

C is the correct answer legally!

Procedurally, the IRS will consider the primary owner (whose SSN is on the account and therefore on the Form 1099-INT) as the person liable for the taxes, unless otherwise clarified on the tax return of the primary owner.