Members of the Maryland Association of Certified Public...

Tax answers

March 04, 1996

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: I have a joint tenancy CD, which I have taken control of this year. Will I owe tax on the interest?

A: By your having "taken control of," I assume you mean you are the surviving joint tenant. or that the other joint tenant(s) have conveyed their interest(s) to you in termination of the joint tenancy. Either way, you are responsible for reporting any interest paid to you in proportion to your ownership interest in the CD. If you own all of the CD and received all of the interest, you report all of the interest. If you received the remaining interest(s) in the CD by means other then survivorship, e.g., by purchasing it from the owner(s) and then received all of the interest, you may able to reduce the amount you are taxed on by the amount of the pro-rata interest, if any, included in the amount you paid. If you received a 1099-INT from the bank for all of the interest on the CD, but part of it belongs to another, list the total on your return and subtract the other owner's portion as a "Nominee Distribution." You pay taxes only on your portion of the interest. Give the other owner(s) a 1099-INT for his or her portion. Details on Nominee Distributions are included in the Schedule B instructions.

Q: Is interest on a student loan that's being paid tax deductible?

A: No. Interest on a student loan is personal interest and therefore not deductible.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

A joint service from The Sun and the Maryland Association of Certified Public Accountants can help you with your tax queries. Association members, all CPAs, will answer questions from readers until April 15. To ask a tax question, call Sundial, The Sun's telephone information service, at (410) 783-1800. Using a touch-tone phone, enter 6225 after you hear the greeting.

Callers are asked to leave their names and phone numbers, should questions need to be clarified. Selected questions will be answered in the Business section. No questions will be answered by phone. Names and numbers will not be published.

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