@Philosopher7
OK... you can only declare and subtract the accrued interest for a purchased bond.....after, and for the tax year that you-yourself get the first interest payment on that bond.
Thus, for Treasury bond interest received & reported in box 3 of a 1099-INT, your accrued interest declared, cannot exceed box 3 for 2022. As a further restriction, you can only enter the accrued interest for the actual bond(s) that that generated the box 3 $$. Thus, for the remaining accrued interest on the other bonds, that won't send you interest $$ until 2023...those accrued interest $$ will only be declared next year when you file your 2023 taxes. AND, you need to keep those detailed records/spreadsheet/notes yourself about how much was already declared and what remains for each bond.
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SO, as an example....for the $400 of Treasury interest you did recieve....if the $400 came from one bond....that you paid the seller (say) $150 of accrued interest...you only declare that $150 as accrued interest for 2022...you can't use the accrued interest from other bonds to negate the $400 total. So in this example $250 of interest would remain taxable for 2022.
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Other: whenever you have accrued interest to declare for bond-types you own...always split out, and report them and their accrued interest in their own 1099-INT. Many times, a broker will issue a 1099-INT with boxes 1,3,&8 on the same form....if you declare your allowed accrued interest on that same 1099-INT form (in the software) the accrued interest will be improperly applied proportionately among the $$ in boxes 1,3&8........Thus, for whatever bond-type has accrued interest to declare, you need to break out that bond-type into its own 1099-INT.
(This is a software thing...some day TTX may have the follow-up page split out the accrued interest into three separate lines for each bond-type...but they haven't yet done so)
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1) For purchased corporate bonds.. all of boxes 1 & 11 would be moved to its own 1099-INT before declaring the "allowed" accrued interest on those bonds.
2) For purchased Treasury bonds.. all of boxes 3 & 12 would be moved to its own 1099-INT before declaring the "allowed" accrued interest on those bonds.
3) For purchased Muni bonds.. all of boxes 8, 9 & 13 would be moved to its own 1099-INT before declaring the "allowed" accrued interest on those bonds.
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4) IF there is no accrued interest to declare,....then then all of the $$ can be on the same 1099-INT form.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
