I visited a Bank of America branch and the representative told me that I can open a Certificate of Deposit account with them and have my mother, a nonresident alien, be the primary account holder while having myself be the secondary account holder.
The representative went on to say that only the primary account holder will receive the taxes forms for the year.
This makes me wonder, that if this is true, isn't this a way to avoid paying taxes on the interests earned on the CD? Are there caveats on this?
Edit: what I found is that
Nonresident aliens who receive interest income from deposits with a U.S. bank, savings & loan institution, credit union, or insurance company, or who receive portfolio interest are exempt from taxation on such interest income as long as such interest income is not effectively connected with a United States trade or business.
In the IRS Publication 519, U.S. Tax Guide for Aliens, we have the following:
Interest income that is not connected with a U.S. trade or business is excluded from income if it is from: • Deposits (including certificates of deposit) with persons in the banking business;
I am assuming that the interests earned from CD account should qualify, but please correct me if I'm mistaken.