Hi,
Thank you so much for this post. I spent all day yesterday on the phone with Turbo Tax trying to get an answer as to why the exempt tax entry on line 2a of my 1040 was significantly less than the total of my exempt amount on Schedule B. None of the 3 reps I spoke to at the time could give me a definitive answer, and some of the suggestions made would have caused me to redo major portions of my Federal and State taxes that already had been completed. Here, in just one short sentence, you have provided the solution.
I immediately looked for the Bond Premium entry on the Summary pages of my financial statements and subtracted the Premium amount that I found on one under Interest Income from the total tax-exempt figure on my Schedule B as you suggested. It brought me closer to the figure on line 2a, but not quite there. Then I realized that, in my case, the tax-exempt interest on my Schedule B came from 4 different sources, including a small amount of exempt interest from a 1099-OID. Sure enough, that also had a "Bond Premium (Covered Transactions Only)" entry, and when I also subtracted that additional amount from my Schedule B tax-exempt amount, it finally matched what was on line 2a of my 1040.
So, just as a reminder, I suggest that anyone trying to reconcile your tax-exempt figure on Schedule B with a lower figure on line 2a of the 1040, be sure to look for the Bond Premium on all documents that showed exempt interest. I found the Bond Premium wording on 2 out of 4 of my own tax-exempt entries shown on Schedule B.
Thanks again to you and to the Turbo Tax rep who gave you the solution that you shared.
Sincerely,
CATON
