1099-INT Tax Exempt

[mabarnes111]

I input my tax exempt amount form my Morgan Stanley 1099-INT on line #8 after I expanded the basic 1099-INT.  When I finish the form my taxes jump as if this was a taxable item.  What is going on?

Thanks...

[CherylW]

Your tax-exempt interest entry shouldn't have an effect on your income.

Try this:

1. Go to My Account. 

2. Go to Tools. 

3. Go to View Tax Summary. 

4. Go to Preview my 1040. 

Look at line 8b.  Your tax-exempt interest should be there, but not reported as taxable.

Now, go back and erase the tax-exempt interest on the input screen.  Repeat the above steps and line 8b should be zeroed out.  Is your tax still higher?

There could be a couple of reasons for that, one being you are getting hit with Alternative Minimum Tax.

Is there anything on line 45?  If there is, that's it.

Tax-exempt interest is used in a lot of calculations to phase you out of things.

Make sure you end up reporting the tax-exempt interest on your final return.