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    slee1234's Avatar
    slee1234 Posts: 5, Reputation: 1
    New Member
    		  
    #1

    Dec 29, 2008, 04:16 PM
    Taxes on interest of certificates of deposit (CDs) held jointly
    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.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #2

    Dec 30, 2008, 05:41 AM
    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.
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