Box 10 of Form 1099-OID, Bond premium, can, in fact be greater than Box 2, Other periodic interest. And you may be able to treat at least some of the excess of the amount in box 10 over the amount in box 2 as an itemized deduction on Schedule A, if you're itemizing deductions.
However, you need to compute the deductible amount, if there actually is one.
According to Deduction for excess premium in the IRS' Publication 529, when the amount of a bond premium allocable to a period exceeds the amount of stated interest allocable to the period, you need to "treat the excess as an itemized deduction on your Schedule A (Form 1040). However, the amount deductible is limited to the amount by which your total interest inclusions on the bond in prior periods exceed the total amount you treated as a bond premium deduction on the bond in prior periods."
Please read the entire section of Publication 529 before proceeding.
If you determine that you are entitled to a deduction, then, to enter the deduction for your excess premium in TurboTax Online:
- If you don’t see 2022 TAXES in the left pane, scroll down and select the dropdown to the right of Deductions & Credits and select Let’s get started, Pick up where you left off, or Review/Edit.
- Otherwise, in the left pane, select the dropdown to the right of Federal, then select Deductions & Credits
- On the Your tax breaks page, scroll down and select the Show more dropdown to the right of Other Deductions and Credits
- Select Start or Revisit to the right of Other Deductible Expenses
- Answer No on each screen until you come to the Did you have any of these other expenses? screen. Here, you'll answer Yes because you had amortizable bond premiums
- On the Tell us about your other expenses page, you'll enter your amount in the Amortizable bond premiums box, then select Continue
According to Other Itemized Deductions in the Instructions for Schedule A, a deduction for amortizable bond premium will be claimed as an Other Itemized Deduction on Line 16 of Schedule A.
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