I have a 1099-INT from DOT for T-bills. The interest is indicated as "Ref. Box 3". Where is the proper place to enter my T-bill interest?

[MichaelMc · Accepted solution]

Box 3 is a reference to the special treatment accorded to interest payments from the United States Treasury. Interest on federal government bonds, bills, and notes is not taxed by the several states.

When entering this interest into TurboTax, enter the name of the payer and the amount, then check the box next to the phrase "What if my form has other boxes filled in?" This will open a screen with Boxes 1 through 14. Your previously entered amount is displayed in Box 1, and should remain there. Then, enter the amount of U.S. Treasury interest in Box 3. Click Continue.

[Rotornut]

I, too, have interest from T-bills.  When I enter the interest amount in both Box 1 and Box 3, TurboTax reduces my refund by the amount in both boxes.  If I enter the interest in just one box, my refund is reduced less.  This leads me to believe you should enter the interest in Box 3 only.

[indianwellstennisgarden]

Did you get a confirmation on this ?
Should we enter the amount only in box 3 or both in box1 and box 3 ?

[MonikaK1]

Enter the information from your Form 1099-INT exactly as it appears on the form. If your form has amounts in both Box 1 and Box 3, enter amounts in both boxes as they appear. You may have received other interest from this payer in addition to Savings Bonds and Treasury obligations. 

However, don't duplicate the Box 3 entry by adding it to the amount in Box 1. Amounts in Box 3 are amounts not included in Box 1 as reported. The IRS instructions for Form 1099-INT, Box 1, state "Enter taxable interest not included in box 3".

When you receive a 1099-INT, you’ll need to understand what each box of the form is reporting, so that you can report your interest on the appropriate lines of your tax return:

• Box 1 of the 1099-INT reports all taxable interest you receive, such as your earnings from a savings account.
• Box 2 reports interest penalties you were charged for withdrawing money from an account before the maturity date.
• Box 3 reports interest earned on U.S. savings bonds or Treasury notes, bills or bonds. Some of this may be tax-exempt.
• Box 4 reports any federal tax withheld on your interest income by the payer.
• Box 8 reports tax-exempt interest and relates to interest-bearing investments you hold with state and local governments, such as municipal bonds.

See this TurboTax tips article for more information.

[indianwellstennisgarden]

Thank you so much for this information.

But the issue is that Treasury Direct doesn't issue a regular 1099INT with individual box level split up.

All it shows is the total interest paid for the year with a note (Ref. Box 3).

So could you please confirm if I should enter that amount only in box 3, or in both box 1 and box 3.

Of course, I see that my tax liability goes up much more if I enter in both !

[DianeW777]

Yes, enter Box 3 as instructed by referencing this box.  You should not enter it in both boxes.  

As indicated by @MonikaK1 you should not duplicate the number.

• 'Amounts in Box 3 are amounts not included in Box 1 as reported. The IRS instructions for Form 1099-INT, Box 1, state "Enter taxable interest not included in box 3".'