turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

TaksMan
New Member

RE 1099-Misc Box 8 - Substitute Payments in Lieu of Dividends or Interest

How does one handle the Box 8 amount earned on Treasury Bonds which should be excluded from state taxes?  

There does not appear to be a place in TT to indicate that this amount was earned on Government securities.  in contrast, Dividends on the same Bonds (1099-DIV, Box1) have an option to spec that they are earned on Government bonds.

 

Similarly, is there a way to indicate that capital gains are earned on Government securities, which are also supposed to be free from state taxes?

 

Any help will be greatly appreciated. 

 

 

x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

3 Replies
DaveF1006
Expert Alumni

RE 1099-Misc Box 8 - Substitute Payments in Lieu of Dividends or Interest

 Yes,  when entering your 1099-INT in TurboTax:

 

  1. Report interest on Treasury Bonds in Box 3 (Interest on U.S. Savings Bonds and Treasury Obligations). This step is crucial because TurboTax uses this information to calculate state tax exclusions automatically.
  2. The screen will ask if you live in ME, MD, MA, NH, NJ, or WV. These states don't tax treasury bond interest.
  3. If your state isn't listed here and if you are certain it doesn't tax treasury bond interest, you may be able to exclude it when you prepare your state return
  4. During the state tax section, TurboTax may prompt you to double-check the source of the interest income. If it doesn't, you may need to manually adjust your state return. For some states, this involves entering the Treasury Bond interest as a subtraction on a specific worksheet or form (e.g., Schedule CA for California)

TurboTax doesn't have a clear way to show that capital gains are from Treasury Bonds. Check if your state allows a specific adjustment for capital gains from U.S. Government securities. If so, you may need to manually enter this adjustment on the relevant state form depending on the state where you live.

 

 

 

 

 

 

 

 

 

 

 

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

RE 1099-Misc Box 8 - Substitute Payments in Lieu of Dividends or Interest

Thank you  DaveF1006,

 

The capital gains issue has been resolved, at least for NJ return.  Under Adjustments, eventually TT will ask if there are any "Disposition of Property" not subject to NJ taxes.  Click YES, and then check all the boxes (under "Omit") corresponding to Treasury obligations in the next screen.  These will be excluded from NJ income.

 

However, my original question was solely in regard to 1099-MISC Box 8 - Substitute Payment in Lieu of Dividends.

Where on NJ return can you indicate that these particular payments are from Treasury bonds?

 

Thank you.

 

 

DianeW777
Expert Alumni

RE 1099-Misc Box 8 - Substitute Payments in Lieu of Dividends or Interest

On the back of your 1099-MISC you are instructed where to report this income, which does not indicate it would be tax free on your New Jersey (NJ) return. If necessary you should check further with the payer of the income to determine if any of it should be tax free.

  • Box 8. Shows substitute payments in lieu of dividends or tax-exempt interest received by your broker on your behalf as a result of a loan of your securities. Report on the 'Other income' line of Schedule 1 (Form 1040). You can use the instructions below to enter the income.

If it is dividends, then it may be added to the cost basis of the security which will reduce gain or increase loss at the time of redemption. This may be why it's taxable income now.

 

Other Miscellaneous Income:

  1. Sign into your TurboTax Online account
  2. Go to Tax Home (left panel)  Wages and Income  section
  3. Scroll to  Less Common Income > Select  Miscellaneous Income, 1099-A, 1099-C
  4. Select Other reportable Income > Enter a description (----) and the amount

@TaksMan 

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

Unlock tailored help options in your account.

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question