I get an error message when my accrued interest paid is more than interest earned on the 1099-INT worksheet sum of box 1,3,8 Bond was moved to another acct b4 pay date.

[rats0001]

So the accrured interest was paid in one acct and the interest earned in a different acct.  
Should I just adjust the accrued interest paid so the total is right, but the worksheet are not right?

[SteamTrain]

Yes, enter the accrued interest for whichever 1099-INT shows actual interest received.

BUT....you will have to make one more change.  For whatever type of bond you paid Accrued interest when buying it, you need to move all those $$ to a separate 1099-INT.  IF you don't, do that accrued interest entry will be spread proportionally between boxes 1,3,&8

Example:  You purchased a treasury bond in the secondary market, and paid the seller whatever the accrued interest was..... You need to move boxes 3&12 values to a separate new 1099-INT before entering the accrued interest on the follow-up page on that new 1099-INT.

IF a corporate bond..it's boxes 1&11

IF Muni bond, it's boxes 8,9,13

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No need to separate just the $ from the bond purchased, just all $$ in boxes 1&11, or 3&12, or 8,9&13.

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IF you ever purchase a bond later in the year, and it doesn't pay the next interest payment to you until the next calendar year...you have to wait until the following year's tax return to put in the accrued interest adjustment.

[rats0001]

Thank you for your answer.

I tried reading Publication 550, about accrued interest, and could not find anything about your last sentence.

The person getting the accrued interest, has to include it in come for that year, regardless of payment date. So why should the payer of accrued interest have to wait to subtract it on sch B until the next payment dateif it in the following year? I'm looking for something in print that says this.

I agree with you that this could be abusive, if I pay accrued interest in late December, and the next payment is in January, and I subtract the accrued interest in year 1, but don't include the interest earnings until year 2.

I have searched the web but have come up empty.  I did the calculation and in my case its <$500, so no big deal.  I just want to report it right.

It seems Turbo Tax will accept any figures as long as total interest is positive, since accrued interest paid is not reported to the IRS.

[SteamTrain]

@rats0001 

In many cases if you go ahead and declare the accrued interest paid out to the buyer...even when it isn't supposed to be declared...it won't be picked up as an error, and won't be detected as being improper, unless the IRS actually audits you.  That's because the $$ in boxes 1,or 3, or 8 usually include enough "other" $$ to cover it.

BUT, if a person buys just one MUNI bond late in the year (with the next interest payout happening the next year)....and that is the only Muni bond they own.  IF they try to declare the Accrued interest they paid to the seller on that year's 1099-INT, then there are zero $$ in box 8....and the software at that point will declare an error, because you cannot offset interest $$ you haven't received yet.

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As to where in the Regs it says you have to wait to the next year in certain situations...I looked it up years ago and found it, but not recently...it's in there somewhere.

[rats0001]

I'm going to keep looking.  All my bonds are corporate taxable bonds, if that makes any difference.