Can I purchase a CD in my personal name using business funds and report the 1099-INT for my S-Corp?

This is actually a common question for small business owners! The short answer is that you generally shouldn't mix business and personal finances, even if it seems like you'd get a better deal. When you purchase a CD with business funds but put it in your personal name, you're creating what tax professionals call "commingling of funds." This can potentially compromise the liability protection of your S-corporation and create accounting nightmares. If the 1099-INT is issued to you personally with your SSN, that interest income needs to be reported on your personal tax return. You can't simply "transfer" that 1099-INT to your business because the financial institution has already reported it to the IRS under your name and SSN. There are some workarounds, but they create additional paperwork. You could potentially have the business "loan" you the money (with proper documentation), but then you'd need to pay the business back with interest at market rates, which defeats the purpose of chasing the higher CD rate. Your best bet is to either find a business-friendly bank with competitive CD rates or consider other short-term investment vehicles appropriate for business funds.

I was in a similar situation with my small business last year and found that dealing with tax documents can be really confusing, especially when it comes to investment income. After spending hours trying to figure out the right way to handle some investment income, I stumbled upon taxr.ai (https://taxr.ai) which was honestly a game-changer for me. I uploaded my 1099-INT forms and other tax documents, and the AI analyzed everything and explained exactly how I needed to report the income. It even highlighted potential issues with mixing personal and business finances that I hadn't considered. The tool basically confirmed what I was suspecting - that I couldn't just attribute personal investment income to my business without creating some serious accounting headaches. It might be worth checking out if you're dealing with these kinds of questions regularly. It helped me avoid making some mistakes that could have raised red flags with the IRS.

I wanted to follow up about my experience with taxr.ai after being skeptical in my earlier comment. I decided to give it a try with a similar situation to yours - I had some business funds I was considering putting in personal investment accounts. The tool immediately identified potential issues with commingling funds that could affect my S-corp status. It explained exactly how the 1099-INT would be treated for tax purposes and showed me why trying to "reassign" that income to my business would create red flags. What impressed me most was when I uploaded my operating agreement and some financial statements, it pointed out specific clauses that could be problematic if I mixed funds. Completely changed my approach - ended up finding a business-focused online bank with decent rates instead. Definitely more helpful than I expected for complex business situations.

If you've been struggling to get answers about this CD/1099-INT situation from the IRS directly, you might want to try Claimyr (https://claimyr.com). I had a similar tax question about attribution of interest income between my personal and business accounts and was getting nowhere with the regular IRS phone line - always on hold for hours only to get disconnected. Claimyr got me through to an actual IRS agent in about 20 minutes who clarified everything. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c - basically it navigates the IRS phone tree for you and calls when it's your turn. The agent I spoke with confirmed that interest income must be reported by whoever is named on the 1099-INT, and trying to attribute personal account interest to a business could trigger an audit. Having that definitive answer from the IRS gave me peace of mind about how to properly handle my situation.

Just want to update on my skeptical comment above. I actually broke down and tried Claimyr yesterday because I needed an answer about a business tax notice I received and couldn't wait any longer. I'm honestly shocked - it actually worked. I got a call back in about 35 minutes (not quite 20, but WAY better than my previous attempts). The IRS agent I spoke with was able to explain exactly what was happening with my notice and what I needed to do next. For what it's worth, I also asked about this CD/personal name situation while I had them on the phone. The agent confirmed that if you receive a 1099-INT in your personal name, you must report it on your personal tax return regardless of where the funds originated from. They specifically warned against trying to "redirect" income to entities after the fact as it raises audit flags. Definitely better to keep business and personal completely separate even if it means accepting a slightly lower CD rate.

Have you looked into business money market accounts instead? Many credit unions offer competitive rates on those without requiring a CD lockup period. We use one for our LLC that's currently paying 3.5% - not quite as high as some personal CDs but the flexibility is worth it.

just want to add that mixing personal and business funds is literally the FIRST thing the IRS looks for when deciding if your business is actually legit or just a "hobby" or tax shelter. my cousin tried something similar (putting biz money in personal investment accounts) and got audited last yr. they made him reclassify his business as a hobby and he lost like ALL his deductions. NOT worth the extra 0.5% interest!!!

Another option might be to have your S-Corp make you a loan with proper documentation (board resolution, promissory note with reasonable interest rate, etc). Then you could invest in a personal CD and pay back the loan plus interest to the company. But honestly, the paperwork and extra tax complications probably cancel out any benefit from the slightly higher CD rate. I'd recommend checking out some online banks that DO offer business accounts. Capital One and American Express both have decent business CD rates right now (3.7-3.8% last I checked). Not the absolute highest but close enough that it's worth keeping things clean.

I'd strongly echo what others have said about keeping business and personal finances completely separate. As someone who's dealt with S-corp compliance issues, commingling funds is one of the fastest ways to lose your corporate protections and create tax headaches. Beyond the legal and tax issues, think about the practical accounting nightmare this creates. Every month when you're doing your books, you'll have to track and explain why business money is earning interest in a personal account. Your accountant will love billing you extra hours to sort this out at year-end. Instead of chasing that extra 0.4% in interest, consider these alternatives: - Treasury bills (currently around 4.5-5%) that you can buy directly for your business - Business money market accounts at online banks like Marcus or Ally - Short-term business CDs at credit unions (often better rates than big banks) The potential savings from a slightly higher CD rate aren't worth the compliance risks. Keep it simple and keep it clean - your future self will thank you during tax season.

As a fellow small business owner, I completely understand the temptation to chase those higher personal CD rates - I've been in the exact same situation! But after reading through all these responses, I think everyone's absolutely right about keeping things separate. I actually just went through this decision process last month with about $75k in business cash. Initially I was looking at personal CDs offering 4.3% vs business CDs at 3.6%. That 0.7% difference seemed significant until I really thought through the complications: 1. The tax reporting nightmare - having to explain to my accountant why business money is generating personal 1099-INTs 2. Potential piercing of corporate veil issues if the IRS questions fund commingling 3. The bookkeeping headache of tracking business money in personal accounts I ended up going with a business money market account at Ally that's currently paying 3.8% with no minimum balance. Not quite as high as those personal rates, but the peace of mind is worth it. The Treasury bill suggestion from Chloe is brilliant too - I hadn't considered that option. You can buy them directly through TreasuryDirect.gov for business accounts, and they're paying around 4.5-4.8% right now for 3-12 month terms. Trust me, the extra paperwork and potential compliance issues aren't worth the few hundred dollars you might save annually on interest rates.

I really appreciate everyone's detailed responses here - this has been incredibly helpful in thinking through the implications I hadn't fully considered. The consensus is pretty clear that mixing business and personal funds, even with good intentions, creates way more problems than it's worth. After reading through all the advice, I think I'm going to explore a few options: 1. The Treasury bills suggestion sounds really promising at 4.5-4.8% - that's actually better than the personal CDs I was eyeing, and it keeps everything properly in the business realm. 2. I'll also look into some of the credit unions mentioned for business money market accounts. The flexibility of not being locked into a CD term might actually be better for our situation anyway, especially if we need the funds sooner than expected for that office expansion. 3. I'll definitely avoid the temptation to chase those personal CD rates. The potential audit flags, accounting complications, and corporate veil issues just aren't worth the marginal rate difference. Thanks for saving me from what could have been a costly mistake! Sometimes the "clever" solution isn't actually the smart solution. Better to keep things clean and compliant from the start.

As a newcomer to this community, I've been following this discussion with great interest since I'm facing a similar situation with my consulting business. The collective advice here has been incredibly valuable - it's clear that keeping business and personal finances completely separate is non-negotiable, even when those personal CD rates look tempting. What really stands out to me is how many different compliance and practical issues can arise from what seems like a simple financial decision. The points about potential audit flags, corporate veil piercing, and accounting complications really drive home why the "clever" approach often isn't the smart approach. I'm particularly intrigued by the Treasury bills suggestion - 4.5-4.8% for business funds while maintaining complete compliance sounds like the ideal solution. For those who've gone this route, are there any gotchas with TreasuryDirect for business accounts that newcomers should be aware of? Thanks to everyone who shared their experiences here. This is exactly the kind of practical, real-world guidance that makes community forums so valuable for small business owners trying to navigate these decisions responsibly.

As someone new to this community and small business ownership, I've found this entire discussion incredibly enlightening. The original question about using business funds for personal CDs seemed reasonable on the surface, but reading through everyone's responses has really opened my eyes to the complexity of maintaining proper corporate compliance. What strikes me most is how a seemingly simple decision to chase better interest rates could potentially unravel years of careful business structure planning. The warnings about piercing the corporate veil and audit flags are particularly sobering - it's clear that the IRS takes fund commingling very seriously. I'm grateful for the practical alternatives that have been shared here, especially the Treasury bills option through TreasuryDirect. At 4.5-4.8%, that actually beats most of the personal CD rates while keeping everything properly documented and compliant. The state tax exemption mentioned is an added bonus I hadn't considered. This discussion perfectly illustrates why community forums like this are so valuable for small business owners. Sometimes the expertise and real-world experience shared by fellow entrepreneurs is worth more than expensive consultations. Thanks to everyone who took the time to share their insights - you've probably saved multiple business owners from making costly compliance mistakes.