1099-OID
cancel
Showing results for 
Search instead for 
Did you mean: 
Highlighted
Level 3

1099-OID

For Tax-exempt Obligations, what's the difference among Acquisition Premium vs. Noncovered Acquisition Premium; Bond Premium vs. Noncovered Bond Premium. Are any of those deductible?

6 Replies
Highlighted
Expert Alumni

1099-OID

The premium is an amount above par that you pay for an investment.  For example, if you buy a $10,000 bond for $10,500, you are paying a premium.  The higher price you pay results in a lower than stated interest rate of the investment.  If it is "covered" it is reported to the IRS.  If it is non-covered, it is not reported to the IRS.   

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Highlighted
Returning Member

1099-OID

Schwab has issued me a 1099-OID with a Bond Premium (Box 10) included.  (I purchased a Tax-free Muni at above par). 

TurboTax is complaining that the premium is greater than the interest in Box 2 (which is filled as zero).  My reading of the 1099-OID instructions (and/or Schwab's explanation) is that, if that interest income is already declared in a 1099-INT (which, in my case, it is), then Box 2 SHOULD be zero.  Should I simply ignore this TurboTax "error"?

Highlighted
Level 3

1099-OID

Can I deduct both covered and no-covered premiums? The top 1099 form only included covered portion.

Highlighted
New Member

1099-OID

I have the same problem.  Any answers?  Schwab is no help.

Highlighted
Returning Member

1099-OID

My bonds were in-state Muni, (double-) tax free.  I did what you did -- changed the 1099-OID , box 2 to the same amount as in box 10, and ran it with no errors, and no change to my taxes. 

I *think* these are only 1099-OID worksheets, but, even if they aren't, all the interest is double-tax free, so, as I understand it, the combinations of Box 2 and Box 10 are intended to offset the taxable interest by the bond premium.  Since the interest is already tax-free, offsetting it has no effect (since there is no tax anyway).  I will turn it in this way -- If I'm wrong, I'm sure the Feds will correct it.

Highlighted
Returning Member

1099-OID

I just did what Richb89600 described - changed box 2 to the amount in box 10 on the OID worksheet, plus on the dropdown below Box 2 clicked Tax Exempt interest. No change to taxes owed based upon this change. Wish somebody could say for sure what the problem is here and how to fix it.

 

Note: I have the same error based upon a muni bond from the State of California, the 1099-OID is also from Schwab.

v
Privacy Settings