1099-INT question - Who reports interest income on joint accounts with adult children?

This is a common question with joint accounts! The answer depends on whose Social Security Number (SSN) was used as the primary taxpayer when the accounts were opened. The bank reports interest income to the IRS using the SSN listed first on the account. This person will receive the 1099-INT form and is technically responsible for reporting it on their tax return. If your SSN was used when opening the accounts, the interest will be reported under your name even if the money belongs to your children. If you want the interest to be reported on your children's returns (since it's their money), you'd need to either change the primary SSN on the accounts or handle it differently when filing. Some parents in this situation will report the interest on their return and then gift that amount to their children.

I went through something similar with my daughter's college savings! Found this amazing tool called taxr.ai (https://taxr.ai) that really helped sort through the confusion. It analyzes tax documents and situations like this to tell you exactly who should report what. I uploaded the account details and explained the joint ownership situation, and it clearly explained that the person whose SSN is listed first on the account is responsible for reporting the interest income. It also suggested how to properly document that this was your children's money if you wanted to show that the economic benefit went to them. Saved me from potentially misreporting and getting confusing letters from the IRS later!

Wanted to follow up about taxr.ai since I decided to try it with my inherited accounts mess. Honestly wasn't expecting much, but it was incredibly helpful! I uploaded statements from three different financial institutions and it correctly identified which 1099 forms belonged on which return (mine vs the estate's). It even flagged a potential issue with a stepped-up basis calculation I was about to do incorrectly that would have cost me thousands. The explanations were super clear too - none of that confusing tax jargon that makes my head spin. Definitely using this for my rental property questions next!

If you're getting nowhere with figuring out the proper tax treatment, you should try calling the IRS directly to get an official answer. I used this service called Claimyr (https://claimyr.com) to actually get through to a human at the IRS without waiting for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had a similar issue with joint accounts with my elderly father and needed clarification on who should report the income. The IRS agent I spoke with confirmed that the person whose SSN is listed first on the account receives the 1099-INT and is responsible for reporting it, but they also explained some options for handling this situation properly. The call took maybe 15 minutes total, which was amazing considering I had previously tried calling them directly and gave up after being on hold for over an hour.

I cannot believe I'm saying this, but I tried Claimyr after posting my skeptical comment. I had been trying for THREE MONTHS to reach someone about a penalty notice I didn't deserve. The Claimyr system called me back in about 40 minutes and connected me directly to an IRS agent who was actually helpful! Got my penalty of $843 removed right there on the call and the agent even explained exactly how I should handle the joint account situation with my kids (which was my original question too). Turns out in my case I needed to file a Form 8814 since some of the accounts were initially opened as UTMA accounts but converted to joint. Would never have figured that out on my own.

Another option is to have the interest directly assigned to your kids through a simple document. My accountant had me create a signed statement that assigns 100% of the interest to my children since it's their money, and keep it with my tax records. Then they report it on their tax returns. The document basically states that even though I'm on the accounts as a joint owner, I'm not a beneficial owner and don't have any claim to the money or the interest. Been doing this for years with no issues.

Maybe I'm missing something obvious, but why not just remove yourself from the accounts altogether? If they're adults and it's 100% their money, there's no reason for you to be on the accounts anymore. That would solve the whole reporting issue and make everything cleaner tax-wise.

Something else to consider - the amount of interest matters too. If it's under $10 per account, the bank doesn't even have to issue a 1099-INT. And if the total interest is small enough, it might not meaningfully impact anyone's tax situation anyway.

Great question! I dealt with this exact situation last year. The key thing to understand is that whoever's SSN is listed as the primary on the account will receive the 1099-INT and is technically responsible for reporting it. However, since it's genuinely your kids' money, you have a few options: 1. **Keep status quo**: You report the interest on your return, then you can gift that tax amount back to your kids (staying under annual gift limits) 2. **Change primary SSN**: Contact Ally to switch the primary SSN to your children's. This needs to be done before year-end to affect the current tax year's reporting 3. **Remove yourself entirely**: Since they're adults, you could remove yourself from the accounts completely - this is probably the cleanest long-term solution 4. **Assignment of income**: Create documentation showing you have no beneficial interest in the accounts, then your kids report the interest (though this requires careful documentation) I'd recommend option 2 or 3 since it eliminates the complexity going forward. The interest rates at Ally are definitely worth keeping - just make sure the tax reporting matches who actually owns the money!

Just wanted to share my experience with a similar situation. I had joint accounts with my college-age son, and we ran into the same confusion at tax time. What worked for us was calling Ally directly to understand their specific policies for 1099-INT reporting. Ally told me they report based on whoever is listed as the primary account holder at the end of the tax year (December 31st), regardless of when changes are made during the year. So if you change the primary SSN in July, your kids would still get the full year's 1099-INT for that tax year. One thing to consider though - make sure your kids are prepared for the tax implications if you switch the accounts to their names. Depending on how much interest we're talking about and their other income, it could affect their tax bracket or eligibility for certain credits/deductions. In our case, the interest was only about $200 total, so it didn't make a meaningful difference either way. I ended up just keeping things as-is and reporting the interest on my return since the amounts were small. But if your kids are earning significant interest, it's definitely worth making the change so they're reporting their own income properly.

I actually went through this exact scenario with my daughter's accounts last year! Since the amounts are relatively small ($300-400), you honestly don't need any special documentation to report it on your return. The IRS isn't going to question a few hundred dollars in interest income - they're looking for much larger discrepancies. That said, if you want to be extra cautious, you could keep a simple note in your tax files explaining that the accounts are joint with your children but the funds belong to them. Something like "Interest reported from joint savings accounts - funds belong to adult children per informal family arrangement." I kept it simple and just reported the interest normally on Schedule B. Never had any issues, and my tax preparer said this is actually pretty common with parents helping adult kids get better interest rates. The key is being consistent - whatever approach you choose, stick with it each year. If the amounts were in the thousands, I'd probably go through the effort of switching the primary SSN or removing myself from the accounts. But for a few hundred bucks, the administrative hassle isn't worth it in my opinion.

I've been following this thread and wanted to add my perspective as someone who works in banking compliance. The advice here is generally solid, but I'd emphasize one important point: whatever you decide to do, make sure you're consistent year over year. If you decide to keep reporting the interest on your return this year, that's perfectly fine for the amounts you're talking about ($300-400). The IRS sees joint account situations like this all the time, especially with parents helping adult children access better rates. However, if you're planning to have these accounts long-term, I'd seriously consider removing yourself entirely (as several others suggested). Not only does it clean up the tax reporting, but it also helps your kids build their own banking relationships and credit history. At 23 and 24, they're well past the age where they need a parent on their accounts. One practical tip: if you do decide to remove yourself, wait until after you receive this year's 1099-INT forms so you can properly report 2024's interest. Then make the change early in 2025 so next year's reporting is clean and simple. The bottom line is that any of the approaches mentioned here are legitimate - just pick one that makes sense for your family's situation and stick with it!