My situation: I have 2 taxable investment accounts both of which earned interest income. One had $2000 Treasury accrued interest paid on notes that only earned $400 in treasury interest due to the timing of their purchases. The other account earned $6000 interest income (non-Treasury). TurboTax flagged it when I adjusted my Schedule B for accrued interest paid because the $2000 was more than the $400, I assume because I am only able to apply the accrued interest paid reduction up to the amount of Treasury interest I received in the same tax year?
I can find no information on irs.gov or online stating this restriction.
Can I not deduct the entire $2000 off my total interest income from all sources? If not do I carryforward the unused $1600 to next year when I earn the bulk of the treasury interest?
I can force it into TurboTax and it does reflect the entire $2000 as an Accrued Interest reduction on my Schedule B, but it still flags it as an error.
Thanks!
