My accrued interest paid is $423 but Schedule B Int and Div Income shows $394, why the difference?

[Mo Q]

My accrued interest paid is $423 but Schedule B shows $394, why the difference?

I am eligible to claim this entire accrued int as I did receive bond interest for 2022.

Please clarify what rules is in TurboTax that reduces this amount.

I have looked on the web, IRS site, TurboTax help, All worksheets, Turbo Tax Forms and nothing explains the rules justifying this reduction.

Thanks

[MonikaK1]

If you are reporting Interest income on an instrument like a bond that had accrued interest at the time you purchased, then yes, you would reduce your interest income by the accrued interest at your purchase date.

See this thread for further discussion of this topic.

See here for more information from the IRS on this topic.

[Mo Q]

Hi MonikaK1,

Thanks for your quick response.  Yes, I know you can reduce your interest income by the accrued interest

you paid for the bond.  The question is, why did Turbo Tax REDUCE the accrued interest paid on my

Schedule B.   my 1099 accrued interest paid on purchases shows $423 BUT Turbo Tax shows $394 - why?

[SteamTrain]

@Mo Q 

I think it's this (Though I can't know your actual details)...so see if this is your situation.

When you get a 1099-INT that has $$ in any combination (2 or more) of boxes 1, and/or 3., and/or 8. reported on it.

And if then you enter the Accrued Interest paid on the follow-up page...there is no designation as to whether that accrued interest was for bonds related to the box 1,3,or 8 $$ entries...and the software then just divides up the accrued interest proportionally against each of the three box values....which of course, is wrong.

_____________________

When you have accrued interest to report on a purchased bond, where $$ are reported in any 2-or-more boxes 1,3,8?.....what you have to do for that bond-type, is to remove all the $$ into it's own 1099-INT, and then report the accrued interest there.

Thus, if the accrued interest was for municipal bonds, you need to remove box 8 $$ (9 &13 too) from a combined 1099-INT, and put those $$ into it's own 1099-INT, and then the accrued interest gets applied to that specific bond-type's $$ amount.  No need to subdivide box 8, 9 & 13 if you hold multiple Muni bonds....just take the whole set of $$ reported into its own 1099-INT.

________________

IF you purchased Corporate bonds with accrued interest....it would be boxes 1&11 in their own 1099-INT

IF you purchased  Treasury bonds/notes with accrued interest....it would be boxes 3 &12 in their own 1099-INT.

[SteamTrain]

@Mo Q 

In case you read this last night, I edited the above response:

Any $$ in box 9 would have to be pulled in along with boxes 8 &13 into that separate 1099-INT when reporting accrued interest on Muni bond purchases.

[Benoit2]

That is because you probably have more than one kind of interest listed on the interest statement (1099) for which you want to report an interest adjustment. As explained, in fine print, on the Report Interest Adjustment page in TurboTax EasyStep, the amount of adjustment will be prorated between the different types of interest income. If you want this adjustment to apply to only one type of interest income, you have to create a separate 1099-INT for each type of interest income and enter the adjustment for the appropriate type of interest income.

It took me a while to finally read the fine print. IMHO, it is quite sloppy from TurboTax to require the users to separate a 1099 into two forms. The software could have easily accommodated the proper treatment of accrued interest by asking to which interest does the adjustment apply.

[rcourt3630]

This is so true! I idk why turbotax doesn't make this much easier after all, What is the point of getting the premier version of turbotax? If it won't help you with 1099B's. Seems like it would be simple enough to rectify during is the step by step. Thx rcourt