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**The information below has not been verified for the 2020 tax year as the IRS Pub. 550 has not yet been released by the IRS.**

The following will assist with the entry of Form 1099-INT Interest Income when the interest belongs to multiple taxpayers.

Per IRS Publication 550 Investment Income and Expenses (Including Capital Gains and Losses), on page 18:

Nominee distributions. If you received a Form 1099-INT that includes an amount you received as a nominee for the real owner, report the full amount shown as interest on the Form 1099-INT on Part I, line 1 of Schedule B (Form 1040 or 1040-SR). Then, below a subtotal of all interest income listed, enter “Nominee Distribution” and the amount that actually belongs to someone else. Subtract that amount from the interest income subtotal. Enter the result on line 2b of Form 1040 or 1040-SR.

File Form 1099-INT with the IRS. If you received interest as a nominee in 2019, 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, 2020 (April 1, 2020, if you file Form 1099-INT electronically). Give the actual owner of the interest Copy B of the Form 1099-INT by January 31, 2019. On Form 1099-INT, you should be listed as the “Payer.” Prepare one Form 1099-INT for each other owner and show that person as the “Recipient.” However, you do not have to file Form 1099-INT to show payments for your spouse. For more information about the reporting requirements and the penalties for failure to file (or furnish) certain information returns, see the General Instructions for Certain Information Returns.

Similar rules apply to OID reported to you as a nominee on Form 1099-OID. You must file a Form 1099-OID with Form 1096 to show the proper distributions of the OID.

Note. This subtraction is completed automatically by the TaxAct® program if Line 16 of Federal Form 1099-INT is completed (in the Q&A that would be on the screen titled Interest Income - Interest Deductions in the Interest received as a nominee field). If the interest received as a nominee was reported in Box 3, then you would instead enter the nominee portion on Line 17 of Federal Form 1099-INT (in the Q&A on the screen titled Interest Income - Interest Deductions in the U.S. Government interest received as a nominee field - you will only see this if you previously entered an amount in Box 3 of the Form 1099-INT).

This would only need to be done on the taxpayer's return to which the Form 1099-INT was issued (i.e. the person whose social security number was listed on the form issued by the financial institution). The other taxpayers' return(s) would include the amount from the Form 1099-INT issued by you to them as outlined below.

TIP: If you received interest as a nominee, you must give the actual owner a Form 1099-INT unless the owner is your spouse. You must also file a Form 1096 Annual Summary and Transmittal of U.S. Information Returns and a Form 1099-INT with the IRS. For more details, see the General Instructions for Certain Information Returns (Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, and W-2G) and the Instructions for Forms 1099-INT and 1099-OID.

Note. The IRS uses this process to receive ownership information that helps determine which return will contain the income.

To enter or review information from Form 1099-INT:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Investment Income in the Federal Quick Q&A Topics menu to expand, then click Interest income (Form 1099-INT).
  3. Click + Add Form 1099-INT to create a new copy of the form or click Edit to review a form already created.
  4. Click Quick Entry to scroll down to answer all applicable questions or click Step-by-Step Guidance to proceed with the program interview questions.
  5. On the screen titled Interest Income - 1099-INT Income, enter the 3. Interest on U.S. Savings Bonds and Treasury obligations amount, then click Continue.
  6. On the screen titled Interest Income - Interest Deductions, enter the Interest received as a nominee or the U.S. Government interest received as a nominee amount, then click Continue.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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