OID on tax exempt bonds not reported and noncovered acquisition premium

[DWK47]

For tax exempt bonds, do I need to include in my tax return any OID flagged on my 1099-OID as "not reported to the IRS"?  Same question regarding items flagged as noncovered acquisition premium.

[DianeW777]

Yes, they need to be reported and included with your tax return income.

The terms covered or uncovered simply refer to the information the broker has access to in regards to your stock basis.  Shares tracked by brokerage operations are called covered shares. Other shares are termed uncovered. You must continue keeping details on uncovered shares that are not tracked for you.

Box 6. Acquisition Premium 

For a covered security acquired with acquisition premium, enter the amount of premium amortization for the part of the year the debt instrument was owned by the holder.  If you reported a net amount of OID in box 1, 8, or 11, as applicable, leave this box blank. You may, but are not required to, report the acquisition premium for a tax-exempt obligation that is a covered security acquired before January 1, 2017.

This can be found when you are entering your Form 1099-OID.  Make sure to use the following steps to enter the acquisition premium.

1. Open your TurboTax account/return (Online or CD/Download)
2. Select Wages & Income > Interest and Dividends > 1099-OID, Foreign Accounts > Start or Update
3. Select the check box beside 'Form 1099-OID...' > Continue > Yes > I'll type it in myself > Continue
4. Type in the information for each box where there is an amount on your Form 1099-OID
5. See the image below.

[DWK47]

Just to be sure, the reply seems to focus on the noncovered acquisition premium and not directly to the OID amounts flagged as "Not reported to the IRS" on the 1099-OID that I received for my tax-exempt bonds. Please respond specifically to the need to include in my return these flagged OID amounts for my tax-exempt bonds.

Thank you.

[RobertB4444]

There are no spaces on form 1099-OID for amounts not reported to the IRS.  If it is on the form then the IRS got a copy.

If someone has added a note to your 1099-OID that tells you about unreported tax exempt interest then I wouldn't think you would need to include it until it becomes reportable.