topic How do you enter accrued interest paid on a 0 Coupon T Bill when it matures? (Form 1099 B not 1099 INT) in TurboTax in Get your taxes done using TurboTax

How do you enter accrued interest paid on a 0 Coupon T Bill when it matures? (Form 1099 B not 1099 INT) in TurboTax

John P5 — Tue, 18 Feb 2025 03:48:45 GMT

Re: How do you enter accrued interest paid on a 0 Coupon T Bill when it matures? (Form 1099 B not 1099 INT) in TurboTax

mesquitebean — Tue, 18 Feb 2025 12:36:17 GMT

@ John P5 asked: "How do you enter accrued interest paid on a 0 Coupon T Bill when it matures? (Form 1099 B not 1099 INT) in TurboTax"

Am I correct in assuming your accrued interest on your 1099-B is reported as "accrued market discount" in Box 1f? If so, here's how it worked for my T-bill:

I entered all the boxes of the 1099-B appropriately including the Box 1f. On the next screen it asked me if there were any unusual things about it and listed about 5 things. In my case, I chose "do not apply", but answer appropriately for your situation. {NOTE: one of the options there is "this accrued market discount was reported on a 1099-INT." I was careful not to choose that since mine was reported on my Form 1099-B.} Then I completed that section. Since I have desktop software, I went into Forms Mode and looked at the Schedule B, and it had indeed transferred the accrued market discount entry to Schedule B, Part I and annotated it as "accrued market interest" (or similar words.)

Re: How do you enter accrued interest paid on a 0 Coupon T Bill when it matures? (Form 1099 B not 1099 INT) in TurboTax

mesquitebean — Tue, 18 Feb 2025 05:18:47 GMT

@John P5

ADDENDUM:

After completing my entry as above, in addition to verifying it showed up on the Schedule B, I also looked at the Form 8949. There on the Form 8949 I saw that an adjustment code of "D" had been entered in column f, and the adjustment amount in column g.

My answer above is only in regard to a Federal return. I'm not familiar with state returns and how states handle it, which may be even be different in different states.

@SteamTrain , do you have anything else to add in this thread? If so, thanks.

Re: How do you enter accrued interest paid on a 0 Coupon T Bill when it matures? (Form 1099 B not 1099 INT) in TurboTax

SteamTrain — Tue, 18 Feb 2025 11:53:14 GMT

@mesquitebean

Sorry....I'm not very conversant on zero's, and haven't read up on how/where you are supposed to enter the accrued interest every year. As a result, I stay away from them entirely.

Re: How do you enter accrued interest paid on a 0 Coupon T Bill when it matures? (Form 1099 B not 1099 INT) in TurboTax

mesquitebean — Tue, 18 Feb 2025 13:58:13 GMT

@ SteamTrain wrote:
Sorry....I'm not very conversant on zero's, and haven't read up on how/where you are supposed to enter the accrued interest every year. As a result, I stay away from them entirely.

Since he mentions Form 1099-B, I think the user's T-bill was bought in the secondary market, and is referring to the accrued market discount column (Form 1099-B, Box 1f). And for me, my similar situation works out like the steps I outlined above for the Federal return. When I enter the 1099-B info into TurboTax, it knows what to do with the Box 1f figure to get it to Schedule B and to correctly annotate the adjustment on Form 8949.

I'll see if I can get one of the TurboTax Tax Experts to look this over. Thanks!

Re: How do you enter accrued interest paid on a 0 Coupon T Bill when it matures? (Form 1099 B not 1099 INT) in TurboTax

mesquitebean — Tue, 18 Feb 2025 14:47:00 GMT

@ John P5

My original answer above may have been something different than what you are actually asking. I may have been confused when you said "Form 1099-B not 1099-INT" and I thought you were referring to the accrued market discount which may not be the case. So I'm going to try to get one of the TurboTax Tax Experts to look this thread over and further assist you. Sorry if I've caused any confusion.

*******************************************

@Vanessa A or @ JamesG1 or @KrisD15 Hi. I see y'all are in the forum at the moment. If one of you has a chance, can you please review this thread and further assist the user. I may have misunderstood what the user is doing/asking. I'm a fellow user, not a tax expert, and wanted to be sure the steps I provided above are correct for what the user is asking in his original question. I also don't know what his state return situation is, and what he'll have to do to make his state treat it appropriately.

Thanks!

Re: How do you enter accrued interest paid on a 0 Coupon T Bill when it matures? (Form 1099 B not 1099 INT) in TurboTax

KrisD15 — Tue, 18 Feb 2025 15:12:25 GMT

Here is a link to a similar question, with answer, which might be helpful.

@John P5

Re: How do you enter accrued interest paid on a 0 Coupon T Bill when it matures? (Form 1099 B not 1099 INT) in TurboTax

John P5 — Tue, 18 Feb 2025 18:02:13 GMT

Thanks for the reply. I did buy a T Bill on the secondary market and wanted to understand how to put the accrued interest that I paid into TurboTax where I have a 0 coupon bill and thus no 1099 INT to deduct this from the interest paid. From the other comments, it appears that I can adjust the cost basis appropriately.

Re: How do you enter accrued interest paid on a 0 Coupon T Bill when it matures? (Form 1099 B not...

DianeW777 — Wed, 26 Feb 2025 17:17:47 GMT

Yes, you can increase the cost basis by any accrued interest paid when you purchased the bond. You are not required to pay tax on income you did not receive. Since you have no interest income from the bond, then you add it to the cost basis of the bond.

@John P5

Re: How do you enter accrued interest paid on a 0 Coupon T Bill when it matures? (Form 1099 B not 1099 INT) in TurboTax

baldietax — Thu, 27 Feb 2025 13:38:55 GMT

@John P5 this is still a bit confusing and wanted to make sure there is no misunderstanding (or understand it myself).

You're saying this was 0 coupon but referring to accrued interest paid at acquisition, and interest paid to you.

T-Bills specifically, don't have accrued interest, your cost basis is what you paid in the market, and should not need adjustment.

If it was a zero-coupon Strips security, you may get an 1099-OID and your broker will adjust your cost basis for the accretion. Upon disposal of a discounted security thru sale or redemption, generally your 1099-B should reflect any remaining AMD in Box 1f and possibly also gain/loss relative to the AMD. AMD is taxable as ordinary income and will transfer to your Schedule B.

Are you able to clarify what instrument this was (CUSIP/description), whether you held to maturity or sell before maturity? What 'adjustment' are you making to the cost basis and where did you get that figure?