What to do with tax exempt bond premium amortization not shown on 1099-INT, but shown in another area of financial report?

[CarolC · Accepted solution]

Follow these steps to make a manual adjustment for the bond premium you paid on your tax-exempt bonds:

1. Select Federal Taxes
2. Under Wages & Income select Interest on 1099-INT
3. Enter your 1099-INT information, select Continue
4. Select I need to adjust the taxable amount, select Continue
5. Enter the state that pays your tax-exempt interest, select Continue
6. Enter the amount of your premium adjustment (use a negative number if you need to add to the interest reported)
   
7. Select the Reason for Adjustment:  I amortized a premium I paid on a tax-exempt bond

If your bond premium amortization is more than the interest paid on your tax-exempt bonds, only the amount up to your tax-exempt interest can be reduced.  The excess premiums are not deductible.

"However, for taxable bonds, if the amount of your bond premium amortization for an accrual period is more than the qualified stated interest for the period, you can deduct the difference as a miscellaneous itemized deduction on Schedule A (Form 1040), line 28."  Click this IRS link Publication 550 for more information.

If you itemize, read this TurboTax article, Tax Deduction Wisdom—Should You Itemize? to see what other tax deductions might be available for you.

[Edited 4.14.18 | 5:26 PM]

[tsandukas]

When making the adjustment do you only use what is not listed on 1099INT (typically bond amortization on "not covered" bonds) or the sum of what is listed (1099INT page) and not listed (included in the back pages of the 1099 package).

Many thanks,

Ted