accrued interest paid on tax free municipal bond

[no-name1]

Do I enter accrued interest I paid for a tax free bond as a POSITIVE or NEGATIVE number?  Instructions are confusing.

Mac download Premier desktop

[baldietax]

enter as a positive adjustment to reduce the interest due to the accrued (hence "If you need to add to the interest reported on this 1099-INT, enter the amount as a negative number." - which would increase interest income)

2 things for awareness:

1. you should report the accrued interest adjustment in the same tax year as the next coupon after purchase e.g. for semi-annual paying if you bought the bond from July onwards the coupon and accrued would be included in your 2026 return.  Most brokerages don't track this year to year you'll need to keep track yourself to carry over any accrued interest to the following year.

2. Turbotax doesn't know how to assign an adjustment to a specific type of income if you have multiple on the same 1099 (i.e. Box 1, Box 3, Box 😎 - so if you have something in Box 1 or 3 as well as Box 8 you should split up the 1099-INT and input income which has an adjustment separately.

[baldietax]

ha Box 8 appeared as 😎

[Mike9241]

if you are using a 1099-INT you cannot use the accrued interest box under adjustments to interest unless it is the only type of interest on that 1099. There is a flaw in TurboTax, say on 1 1099-INT, there's $1000 of taxable and $1000 muni, and $200 of accrued interest that relates solely to the muni. TurboTax will prorate this so that taxable and muni will each show up on your return as $900. The workaround is to enter the muni on a separat1099-INT. 

[no-name1]

Thank you Mike 9241 and baldietax