Get your taxes done using TurboTax
@TD2023 wrote:
I can't believe the tax preparer needs to separately provide this information to a beneficiary.
It is entirely logical since interest from US Treasury obligations is federal taxable.
The interest is only exempt from state taxation and, (a) some states do not levy a state income tax whatsoever, and (b) the total income (including Treasury interest) on some K-1s may not even meet the state threshold for having to file a state return for states that tax individual income.
Regardless, the Treasury interest would, in virtually all cases, be reported on a state iteration of a K-1 (not some separate statement) and reported as such by the beneficiary. An example (for Illinois) is depicted below.
