1099-INT Box 3

[delta_hotel]

Hello Experts,

Confused why my federal tax refund goes up when I enter my treasury bill interest in box 3 verses box 1 for 1099-INT.  The amount is the same, but the tax liability is higher when entering in box 1 than in box 3.  I know interest from treasury bills is exempt from state and local taxes, but I thought it was treated as regular interest for Federal tax purposes.  Again, same amount in box 1 produces a considerably different tax liability than if I put this amount in box 3 and blank out box 1.

Any ideas why this is the case?

Thanks for your input in advanced.

Dave 

[MonikaK1]

Your "refund meter" may not be updating right away. This could be an Internet connectivity issue. Also, be sure you are looking at the Federal meter.

I just tried this with a test Form 1099-INT. The Federal tax went up by the same amount whether I entered the income in Box 1 or in Box 3.

Since the refund meter may not always be reliable, you can preview your return before filing to find out how your taxes were calculated. See here for details. 

[mesquitebean]

User appears to be using desktop Home and Biz software, so it doesn't need Internet during preparation other than for product updates.