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i borrowed money from my mom, and invested with someone, in

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the form of a note...
i borrowed money from my mom, and invested with someone, in the form of a note (ie: a loan to this individual and he used the money to fund a project). I was paid back the money and interest on the money I loaned. I earned 5% interest. I kept 2% and paid 3% of that interest down to my my. Do I need to send her a 1099 INT so that I am not responsible for all 5% interest earned?
Submitted: 5 years ago.Category: Tax
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1/2/2012
Tax Professional: Jax Tax, Tax Attorney replied 5 years ago
Jax Tax
Jax Tax, Tax Attorney
Category: Tax
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Experience: JD, LL.M in Business and Taxation, IRS Enrolled Agent. Expert in Business and Tax Transactions
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Jax Tax : You do not need to send her a 1099.
Jax Tax : You must report the entire 5% interest paid to you, nut the interest you pay on the loan to your mother will be a sch A deduction. Investment interest deduction.
Jax Tax : So as long as you itemize, you will only be paying tax on the net interest earned.
JACUSTOMER-tz72egb9- :

How does my mom make sure she is covered from the IRS then, if she is earning interest and shows nothing to report it?

Jax Tax : She does have to report it on her 1040 sch B. You just don't have to issue her a 1099.
Jax Tax : It is up to her to self report.
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Tax Professional: Jax Tax, Tax Attorney replied 5 years ago
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