I own some bonds. Some of them are taxable and some are tax-free. I bought some bonds and paid accrued interest on them during 2021.
I used TT to download the 1099-INT with all the information about these bonds from my broker. TT correctly downloaded my interest income from these bonds. But (1) TT did not take note of which states my tax-free bonds are from, and (2) TT did not take note of the accrued interest I paid. So I have to enter that information manually.
Then in addition, when I go to enter the accrued interest, TT displays this message: "Since you have more than one kind of interest listed on this interest statement, the amount of your adjustment . . . will be prorated between the different kinds of interest income. If you want this adjustment to apply to only one type of interest income, create a separate 1099-INT for each type of interest income and enter an adjustment for the appropriate type of interest income."
Questions:
1. Why doesn't TT automatically take in the information about which states the tax-free bonds are from when it downloads the information from my broker?
2. Why doesn't TT automatically take in the information about accrued interest paid on bond purchases when it downloads the information from my broker?
3. Why doesn't TT provide a simple way to allocate accrued interest to the correct kind of bond income, without requiring the user to create separate 1099-INTs from the same broker?
4. If I simply input the total accrued interest and allow TT to prorate it between the different kinds of interest income, as it says it will, is that OK with the IRS?
5. I am using TT Deluxe. Would TT Premier or some other edition do a better job with the above points? Would it automatically consider the state information, the accrued interest, and proper allocation of accrued interest?
Thanks.
