I held two CDs with my grandmother jointly (with "or" between our names). She was the primary account holder and received the 1099 tax forms. She passed away last October, but the CDs don't mature until May and August. I understand that if I close them early I'll pay a big penalty. I'll reimburse my uncle (the executor) for taxes on last year's interest, but is there any way I can be named on the current year's 1099s and receive them directly so my uncle doesn't have to be bothered with it again next year? He's asked me to do take care of this.

You'll have to contact the bank that holds the CDs, of course. They will need a copy of your grandmother's death certificate. Under the laws of most states, the CDs became your property by operation of law upon your grandmother's death.

The death certificate, coupled with confirming identification from you, plus your social security number, should be all that the bank needs in order to update its records to reflect your sole ownership, and ensure that any interest reporting for 2007 is done under your social security number and address.

You and your uncle may also be able to simply allocate the interest earned in 2006 between your grandmother and yourself when your uncle files her final tax return for that year. Check with your tax advisors on how to do that.

Finally, it's possible that the bank will waive early withdrawal penalties on the CDs if you need to withdraw the funds early. Many banks make that accommodation when an owner of a CD dies. You may have already found that your bank doesn't waive the penalty. If you have not, check it out just to find out what your options are.

Thanks! One bank employee told me (in person, at a NY branch) that the only way to become the primary or sole account holder was to close the CD and open a new one, which would mean a big penalty, but I wasn't sure the employee was well informed. I'll try a DC branch tomorrow, since I'll be in the neighborhood.

Here's how it turned out for one of the CDs:
The bank rep I saw yesterday in DC (the bank is HSBC) consulted the bank's Estates department, who advised him to close the CD at no penalty but then reopen it in my name as a 6-month CD at a slightly better rate. This is the CD which would have matured in August--it now matures in July. I'm told a 1099 will go only to me, not the estate.
The CD that matures in May is at Dime Bank of Williamsburg, so I'll have to get to NY to take care of it. I hope the delay in getting there won't be a problem in terms of the 1099.

My husband has a CD that matures in June.It was origionly opened in 2002 at 7% interest. $40000.00 was deposited at that time. What is the percentage of taxes we will pay if we cash it in come June?

No one but you can answer this question Anon. Interest has been accruing throughout the period of time since 2002 and you should have been getting a statement from your bank each year on the interest earned from the CD.

Only you know what tax bracket you are in and whether any tax has been owed each year since 2002 and any tax to be owed on the interest when the CD matures in June.