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rhaasn6
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A 1099 has Accrued Interest Paid on Purchases.A negative #. Does this go on the form? Is it part of Box 1 Int? If entered separate, is it pos or neg? Reduce Interest Inc?

I am looking to clarify the place to put the Accrued Int (negative #), whether to put it as positive or negative or if it should reduced the Interest Income value above it.

Another question like it:

There are values for Bond Premium and Bond Premium on Tax-Exempt Bonds, should these be entered as positive or negative on the 1099-INT? The Account statement shows them as negative but the 1099 seems to expect a positive #.

Thanks in advance.

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1 Reply

A 1099 has Accrued Interest Paid on Purchases.A negative #. Does this go on the form? Is it part of Box 1 Int? If entered separate, is it pos or neg? Reduce Interest Inc?

OK...In TurboTax it goes in as a positive number.

But you have to know what box it goes with.  is it for a corporate type bond (box 1), a US treasury bond (box 3) or for a municipal bond (box 8)?

IF you have a 1099-INT with a mixture of box 1, 3, and 8 entries, then you will have to split out the appropriate box $$ that the accrued interest applies to, into it's own 1099-INT.  But it is important to note that box 1 $$ always goes along with box 11 $$, box 3 with box 12 , and box 8 with box 13

Example for box 8: You bought a municipal bond in 2018 with accrued interest that you paid for. Your 1099-INT has box 1, box 3, box 8, and box 13 values in it.  In order to properly account for that box 8 accrued interest

1)...you remove the values for box 8 &13 form that 1099-INT (The whole amounts) 

2)......and then create a separate 1099-INT from that same payer..with just the box 8 and 13 values on it.....then on the page AFTER that main 1099-INT you have a page with checkboxes:

3)......and you check "I need to adjust the taxable amount" 

4).....For Muni bonds on the next page you have to indicate what state the bond interest in box 8 came from...right now, if it was form a mixture of states just select "More than one state" (last on the list) and move to the next page...unless you only hold muni bonds issued by your own state (or it's municipalities/cities/counties etc).

5)....then the next page you enter your accrued interest amount and make the selection to indicate that it is an accrued interest adjustment. "Continue" out and it's done

______________________

Complications:  if you bought a bond with accrued interest in late 2018, but that bond didn't make it's next interest payment until sometime in 2019 ...then you have to wait until next year to include it in you tax return.  You cannot claim the Accrued interest deduction until the tax year that particular bond issues it's first payment to you.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
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