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Level 2
Feb 19, 2025 11:47 PM UTC
Question

Accrued interest bug 2024

TurboTax Premier 2024.  My brokerage report correctly reports my interest income, but TurboTax incorrectly adds the accrued interest which is not taxable.  It is not there on Form 1099-B but is there (itemized) on Form B and is included on Form 1040.  I cannot edit it away.  

    22 replies

    Alumni - Intuit
    Feb 19, 2025 11:51 PM UTC

    You may need to delete the Form 1099-B that you downloaded and then enter it in manually.

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    kdk2Author
    Level 2
    Feb 19, 2025 11:55 PM UTC

    I tried that but the bad information is still there on Form B

    baldietax
    Level 12
    Feb 27, 2025 12:47 PM UTC

    are you referring to "Accrued Market Discount" in Box 1f on your 1099-B, for example on a discounted Treasury Note or Muni?  This is taxable as ordinary income and will transfer to your Schedule B.  Even on a Muni if you purchase it at a discount greater than the "deminus" amount (0.25% per year til maturity) this AMD is taxable not tax-exempt.

    kdk2Author
    Level 2
    Feb 27, 2025 5:55 PM UTC

    My 1099-B reports an amount "taxable accrued interest paid", which is reported as an adjustment on TurboTax schedule B-INT.  The item I'm writing about is not the same.  My brokerage statement reports informational items which are not reported to the IRS.  For treasury bonds it reports treasury interest including market discount and treasury accrued interest paid.  I downloaded the full statement to TurboTax and TurboTax transferred the discounts as taxable items to schedule B (but not to schedule B-INT or to the worksheet) 

     

    I can handle the problem by adding the discount amounts to the adjustment, but that doesn't seem right.

     

    AmyC
    Alumni - Intuit
    Feb 28, 2025 10:50 PM UTC

    Since your paperwork 1099-B,  shows taxable accrued interest from a sale, the amount  would be used to adjust / increase the taxable interest.

    • The buyer of a bond will deduct accrued interest for the bond purchased. 
    • A seller would add the interest as an adjustment.
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    Level 2
    Mar 1, 2025 11:46 PM UTC

    yes the desktop turbo tax deluxe had a bug. It did not allow you  to deduct  accrued interest paid at purchase of securities on schedule B.  I deleted the downloaded 1099 int yesterday - updated TurboTax and again downloaded the 1099 int.  Then I was able to deduct the accrued interest paid from sch B by clicking on the downloaded entry and boxes came up asking if any of these entries need adjustment. 
    turbo tax should have notified users of the bug and told us they were working on a fix

     

    SteamTrain
    Level 15
    Mar 2, 2025 12:35 AM UTC

    @pbtaxpayer 

    OK...that is "almost" the way to do if for accrued interest you PAID to the seller when you bought the bond in 2024.

    (Now, I don't think this applies to Treasure Zero's, I don't know how to treat those..)

    _______________

    BUT for regular, Corporate, or Treasury Bonds/Notes, and Munis?

    IF your 1099-INT has a combination of box1, 3, and 8 $$  reported on it, and you enter the accrued interest you paid on the follow-up page?   Then the $$ are improperly applied proportionately against the $$ in boxes 1, 3, and 8.

     

    Thus, for any year you buy a bond or MUNI, and pay accrued interest with the purchase, you must manually break up that 1099-INT into Up-To 3 separate 1099-INT forms.

     

    Thus box 1, 11, and any accrued interest for corporate bonds are on reported one 1099-INT

    .....box 3, 12, and any accrued interest you paid for US Govt bonds on a second 1099-INT

    ....box 8, 13 , and any accrued interest you paid on any MUNI bonds you bought on a third 1099-INT.

     

    Of course, if you only bought (say) some Muni's during 2024, then you'd only need to take out the 8 & 13 $$ into their own 1099-INT to report the accrued interest you paid for those.

    _____________________________

    A complication to all that is that IF the bond you bought in 2024, does not actually pay out interest to YOU in 2024...then you have to wait until 2025 taxes to report the accrued interest you paid out to buy that bond.  i.e. you are only supposed to offset the accrued interest you paid for the bond, in the year you actually get some interest from it.   (buy a Muni in Nov of 2024..pays interest to you in say Feb of 2025....you offset that with your 2025 tax filing).  I use a spreadsheet to keep track of which year I cand declare the accrued inters I paid.

    ______________________

    Someday...I hopelessly pray...that someday, on the follow-up page where the software asks about the accrued interest you paid...that they (TTX software folks) will provide 3 separate lines...one for Corporate bond purchased, one for Treasuries, and one for Muni's, so that we don't have to be messing with the separate 1099-INT forms.

     

     

     

    ____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
    kdk2Author
    Level 2
    Mar 2, 2025 7:41 PM UTC

    Thank you so much for your reply - that is very helpful.