Treasury Bill Interest - 1099-INT Box 3

[easterlee]

Hi, All.

Entering treasury interest in Box 3 of the 1099-INT should be subject to my marginal federal tax rate, right?  Let's say I am well-within the 24% bracket where the added treasury interest does not come close to the next bracket, why would TT calculate a higher rate (in my example case: 27.8%), instead?

Any insight is appreciated.  Thanks in advance.

[SteamTrain]

A couple Odds&ends

1) If your taxable income is still below 100,000.....then the tax tables are used for at lest some of your income and those tables have tax jumps...not smooth calcs.

2)  the additional income somehow affects some other deduction or credit.  To see if that's the case, you'd need a printout of your 1040 both before & after you put in the box 3 $$.

[Mike9241 · Accepted solution]

It seems like you have excessive investment income and are getting hit by the 3.8% net investment income tax form 8960.

[dmertz · Accepted solution]

Net Investment Income Tax is just one of the the things that could explain your marginal tax rate being higher than your tax-bracket rate, but is a good guess given the result.  There are all sorts of other reasons that the increase in your AGI caused by the additional income could result in an increase the taxable amount of some other income or decrease the amount of some tax credit, but those would be unlikely to cause your marginal tax rate to be exactly 3.8% higher than your tax-bracket rate.

[VolvoGirl]

Do you get Social Security?  More income might make more of your SS taxable.  When you enter one taxable transaction, you can't just watch the monitor. You increased your overall adjusted gross income and with that come many other changes in your return, not just the incremental tax on the one transaction. More income can make more of any Social Security taxable and can increase or decease any credits you qualified for.

[easterlee]

IRS Form 8960 looks to be it.  The calcs match, so thank you very much!