US Treasury Interest from 1099-INT in Box 1 or Box 3 or both?

[surfgood]

Greetings.  I see a couple of answered questions on this subject, but they do not address this question.  My 1099-INT (from holding a US Treasury Bond) has a $$ in Box "Total Interest Paid or Credited".  Do I enter this amount  into both box 1 and 3, or just Box 3 (US Treasury Interest)? 

[MinhT1]

You will enter the amount in box 3 of form 1099-INT in only box 3 of the TurboTax entry form. Do not enter it in Box 1.

[robtm]

T-Bond interest per instructions on 1099-int for line 3 says 'This interest is not included in Line 1'. Therefore it would be entered in Line 3 only.

[surfgood]

Awesome, thanks for the quick reply.

[Winlife]

HELP! So why is the tax so different? If I enter my Treasury Notes $8400 interest in box 3 from my 1099-R, I get back $1600 LESS than entering the SAME amount in Box 1 instead (let's ignore the whole state tax stuff).  Is treasury interest taxed at a much higher rate or something on short term Treasury notes? I am totally baffled what is going on and searching on the internet has produced no answers. I wondered if TurboTax had an error or something? Or is there a reason other than the state taxation that Box 3 was created? Note: I always held them to maturity, but bought 3-12 month "bonds".

[DaveF1006]

I assume you mean a 1099 INT rather than a 1099R. If you reported this in Box 3 of a 1099R then your amounts will be much greater if you report these in Box 3. If you reported these in a 1099R, remove the entries and report in a 1099 INT

Reporting these in a 1099 INT, the amounts should not differ. These are still tax at the ordinary tax rates.

[Winlife]

Thanks. I meant 1099-Int. Thanks for the reply.  I am still at wits end trying to figure this out though. Totally different amounts calculated as taxes if I put it in box 1 versus box 3 in the 1099-Int form in Turbo Tax (making sure it is freshly calculated each time). I only found this out because the first time through I accidently put my Treasury interest in box 1 and caught it during my final review. When I switched it to the correct box thinking it only mattered because of different states handling of it my federal taxes varied a huge amount. Any ideas of this being anything but a software error? I double checked to make sure I was using a 1099-INT ( where Turbo Tax hides all boxes except Box 1 and you have to check the box to show Box 3). 

[MonikaK1]

Typically, interest from corporate bonds or banks will be in Box 1 of Form 1099-INT, interest from U.S. Treasuries will be in Box 3, and tax-exempt interest from muni bonds will be in Box 8. Even if you don't have to pay income tax on the interest, you still need to include it on your Federal tax return. U.S. Treasury bonds are exempt from state and local income taxes but are taxable at the federal level.

• 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. 
• 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.

If you need to enter adjustments to interest income reported on Form 1099-INT, look for the follow-up screen "Do any of these uncommon situations apply?" and choose "I need to adjust the interest reported on my form". On the following screen, enter any subtraction  and select a reason for the adjustment from the drop-down menu.

When you complete a state interview in TurboTax, you are asked a series of questions about any items that need to be treated differently or allocated among different states, and you will see the Box 3 amount listed as a subtraction from state income. You don't have to do anything unless you need to allocate the subtraction amount among different states.

See this TurboTax tips article and this one on investment bonds for more information.

[rxc2]

I take it back. My bad.