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Free File State Return Only

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Free File State Return Only

Free file state return only Index A Activities not for profit, Hobby Expenses Adjustments to gross income Armed forces reservists' travel expenses, Armed Forces reservists traveling more than 100 miles from home. Free file state return only Performing artists, Performing Artists State or local government officials paid on fee basis, Officials Paid on a Fee Basis Unlawful discrimination claims, Unlawful discrimination claims. Free file state return only Administrative fees IRA trustees, Trustee's Administrative Fees for IRA Adoption expenses, Adoption Expenses Amortizable bond premium, Amortizable Premium on Taxable Bonds, More information. Free file state return only Appraisal fees, Appraisal Fees Armed forces Military uniforms, Military uniforms. Free file state return only Reservists, travel expenses, Armed Forces reservists traveling more than 100 miles from home. Free file state return only Assistance (see Tax help) B Bad debts, Business Bad Debt Bank accounts Check-writing fees, Check-Writing Fees on Personal Account Losses on deposits, Loss on Deposits Bonds Amortizable premium, Amortizable Premium on Taxable Bonds Breach of contract Damages, Damages for Breach of Employment Contract Bribes, List of Nondeductible Expenses Burial expenses, List of Nondeductible Expenses Business expenses (see Employee business expenses) Business gifts, Gift expenses. Free file state return only C Campaign contributions, Lobbying and political activities. Free file state return only , Political Contributions Campaign expenses, Campaign Expenses Capital expenditures, Capital Expenses Casualty losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Cell phones, Depreciation on Computers Chambers of Commerce dues, Lobbying and political activities. Free file state return only Check-writing fees, Check-Writing Fees on Personal Account Claim of right repayments, Repayments Under Claim of Right Clerical help, deductibility of, Clerical Help and Office Rent Clothes Protective, Protective clothing. Free file state return only Work, Work Clothes and Uniforms Club dues, Club Dues Commissions, Commissions Commuting expenses, Commuting Expenses Computers Depreciation, Depreciation on Computers, Depreciation on Home Computer, Excess Deductions of an Estate Convenience fees, Credit or Debit Card Convenience Fees Criminal prosecutions Travel expenses for federal staff, Federal crime investigation and prosecution. Free file state return only D Damages Breach of employment contract, Damages for Breach of Employment Contract Deposits Losses on, Loss on Deposits Depreciation Computers, Depreciation on Computers, Depreciation on Home Computer, Excess Deductions of an Estate Disabilities, persons with Work-related expenses, Impairment-Related Work Expenses Dividends Fees to collect, Fees To Collect Interest and Dividends Service charges on reinvestment plans, Service Charges on Dividend Reinvestment Plans Dues, Dues to Chambers of Commerce and Professional Societies (see also Expenses) (see also Fees) Chambers of Commerce, Dues to Chambers of Commerce and Professional Societies Club, Club Dues Lobbying, Dues used for lobbying. Free file state return only Professional societies, Dues to Chambers of Commerce and Professional Societies Union, Union Dues and Expenses E Education, Educator Expenses, Education Expenses During Unemployment Education expenses, Work-Related Education, More information. Free file state return only Employee business expenses Form 2106 and Form 2106-EZ, Form 2106 and Form 2106-EZ. Free file state return only Performing artists, Performing Artists Unreimbursed, Unreimbursed Employee Expenses Employment Agency fees, Employment and outplacement agency fees. Free file state return only Breach of contract, Damages for Breach of Employment Contract Entertainers and musicians (see Performing artists) Entertainment expenses, Meals and entertainment. Free file state return only Estates Federal estate tax, Federal Estate Tax on Income in Respect of a Decedent Expenses, Dues to Chambers of Commerce and Professional Societies, Education Expenses During Unemployment (see also Dues) (see also Fees) Adoption, Adoption Expenses Campaign, Campaign Expenses Capital, Capital Expenses Commuting, Commuting Expenses Education Work-related, Work-Related Education Educator, Educator Expenses Qualified, Qualified expenses. Free file state return only Educator Expenses, Eligible educator. Free file state return only Employee business (see Employee business expenses) Entertainment, Meals and entertainment. Free file state return only Funeral and burial, List of Nondeductible Expenses Gifts, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging, Gift expenses. Free file state return only Health spa, Health Spa Expenses Hobby, Hobby Expenses Home office, Home Office Impairment-related, Impairment-Related Work Expenses Investment, Investment Fees and Expenses, Investment-Related Seminars Job search, Job Search Expenses Legal (see Legal expenses) Local lodging, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Meals, Meals and entertainment. Free file state return only , Lunches With Co-workers Meals and entertainment, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Nondeductible, Nondeductible Expenses Over limit, educator, Educator expenses over limit. Free file state return only Personal, Nondeductible Expenses Production of income, Other Expenses Professional promotion, Professional Reputation Tax-exempt income, Tax-Exempt Income Expenses Travel and transportation, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Travel as education, Travel as education. Free file state return only F Federal estate tax, Federal Estate Tax on Income in Respect of a Decedent Fees, Dues to Chambers of Commerce and Professional Societies (see also Dues) (see also Expenses) Appraisal, Appraisal Fees Check-writing, Check-Writing Fees on Personal Account Employment and outplacement agency, Employment and outplacement agency fees. Free file state return only Investment, Fees To Collect Interest and Dividends, Investment Fees and Expenses IRA trustee, Trustee's Administrative Fees for IRA Legal (see Legal expenses) License, Licenses and Regulatory Fees Professional accreditation, Professional Accreditation Fees Fines, Fines or Penalties Form 2106 Employee business expenses, Form 2106 and Form 2106-EZ. Free file state return only Form 2106-EZ Employee business expenses, Form 2106 and Form 2106-EZ. Free file state return only Form 4562 Depreciation and amortization, Reporting your depreciation deduction. Free file state return only , Depreciation. Free file state return only , Computer used in a home office. Free file state return only Free tax services, Free help with your tax return. Free file state return only Funeral expenses, List of Nondeductible Expenses G Gambling winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Government employees Federal criminal investigation and prosecution travel expenses, Federal crime investigation and prosecution. Free file state return only State or local government officials paid on fee basis, Officials Paid on a Fee Basis H Health spa, Health Spa Expenses Help (see Tax help) Hobbies, Hobby Expenses Home Security system, Home Security System Telephone service, Residential Telephone Service Home office Computers, Computer used in a home office. Free file state return only Expenses, Home Office Principal place of business, Principal place of business. Free file state return only Travel and transportation expenses, Home office. Free file state return only I Impairment-related work expenses, Impairment-Related Work Expenses Income aid payment, Repayment of Income Aid Payment Income in respect of decedent Estate tax, Federal Estate Tax on Income in Respect of a Decedent Individual retirement arrangements (IRAs) Trustees' fees, Trustee's Administrative Fees for IRA Insurance Business liability, Business Liability Insurance Life insurance, Life Insurance Premiums Malpractice, Unreimbursed Employee Expenses Personal disability, List of Nondeductible Expenses Interest income Fees to collect, Fees To Collect Interest and Dividends Investments Annuity, unrecovered investment in, Unrecovered Investment in Annuity Deposits, losses on, Loss on Deposits Fees and expenses, Investment Fees and Expenses Seminars, Investment-Related Seminars Itemized deductions Deductions not subject to 2% limit, Deductions Not Subject to the 2% Limit Deductions subject to 2% limit, Introduction, Deductions Subject to the 2% Limit How to report, How To Report J Job search, Job Search Expenses, Travel and transportation expenses. Free file state return only K Kickbacks, List of Nondeductible Expenses L Legal expenses Job-related, Legal Fees Personal, Personal Legal Expenses Political campaigns, Legal fees. Free file state return only Production of income, Legal Expenses Unlawful discrimination claims, Legal Expenses Licenses Fees, Licenses and Regulatory Fees Life insurance, Life Insurance Premiums Lobbying, Lobbying and political activities. Free file state return only , Lobbying Expenses, Exceptions. Free file state return only Local transportation, Local transportation expenses. Free file state return only Losses Casualties and thefts, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Deposits, Loss on Deposits Gambling, Gambling Losses Up to the Amount of Gambling Winnings IRA, Loss on IRA Mislaid cash or property, Lost or Mislaid Cash or Property Partnership, Loss From Other Activities From Schedule K-1 (Form 1065-B), Box 2 Roth IRA, Loss on IRA M Mail carriers, rural, Rural Mail Carriers' Vehicle Expenses Malpractice insurance, Unreimbursed Employee Expenses Meal and lodging expenses, Meals and entertainment. Free file state return only Lunches with coworkers, Lunches With Co-workers Working late, Meals While Working Late Medical examinations, Unreimbursed Employee Expenses Mileage rate, What's New Missing children, photographs of, Reminders Mutual funds Indirect deductions, Indirect Deductions of Pass-Through Entities N Nondeductible expenses, Nondeductible Expenses, Wristwatches Not-for-profit activities, Hobby Expenses O Occupational taxes, Occupational Taxes Office Home (see Home office) Rent, Clerical Help and Office Rent Outplacement agency fees, Employment and outplacement agency fees. Free file state return only P Partnerships Indirect deductions, Indirect Deductions of Pass-Through Entities Pass-through entities, Indirect Deductions of Pass-Through Entities Passport expense, Unreimbursed Employee Expenses Penalties, Fines or Penalties Performing artists, Performing Artists Work clothes, Work Clothes and Uniforms Personal expenses, Nondeductible Expenses, Wristwatches Political contributions, Lobbying and political activities. Free file state return only , Political Contributions Campaign expenses, Campaign Expenses Ponzi-type investment schemes, Losses From Ponzi-type Investment Schemes Postal workers, Rural Mail Carriers' Vehicle Expenses Production of income expenses, Other Expenses, Loss on IRA Professional accreditation fees, Professional Accreditation Fees Professional journals, Unreimbursed Employee Expenses Professional reputation and marketing, Professional Reputation Professional societies dues, Lobbying and political activities. Free file state return only Prosecution travel expenses, Federal crime investigation and prosecution. Free file state return only Protective clothing, Protective clothing. Free file state return only Publications (see Tax help) R Recordkeeping requirements Computer used for home and business, Depreciation on Computers Deductions, to verify, Introduction Gambling winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Home office, Home Office Relief fund contributions, Relief Fund Contributions Rent Office, Clerical Help and Office Rent Safe deposit box, Safe Deposit Box Rent Repayments Claim of right, Repayments Under Claim of Right Income, Repayments of Income Income aid payments, Unreimbursed Employee Expenses Social Security benefits, Repayments of Social Security Benefits Reporting requirements Armed Forces reservists, Armed Forces reservists. Free file state return only Computer used in a home office, Computer used in a home office. Free file state return only Depreciation, Depreciation. Free file state return only Form 2106 and Form 2106-EZ, Form 2106 and Form 2106-EZ. Free file state return only Impairment-related work expenses, Impairment-related work expenses. Free file state return only Itemized deductions, How To Report Tax preparation fees, Tax preparation fees. Free file state return only Research expenses, Research Expenses of a College Professor Résumé, Résumé. Free file state return only Rural mail carriers, Rural Mail Carriers' Vehicle Expenses S S corporations Indirect deductions, Indirect Deductions of Pass-Through Entities Safe deposit box, Safe Deposit Box Rent Security systems, home, Home Security System Seminars, investment-related, Investment-Related Seminars Service charges on dividend reinvestment plans, Service Charges on Dividend Reinvestment Plans Social Security repayments, Repayments of Social Security Benefits State or local governments Officials paid on fee basis, Officials Paid on a Fee Basis Stockholders' meeting expenses, Stockholders' Meetings T Tax help, How To Get Tax Help Tax-exempt income expenses, Tax-Exempt Income Expenses Taxes Estate tax, Federal Estate Tax on Income in Respect of a Decedent Occupational, Occupational Taxes Telephones Cell phone, Depreciation on Computers Residential service, Residential Telephone Service Theft losses, Casualty and Theft Losses, Casualty and Theft Losses of Income-Producing Property Tools, Tools Used in Your Work Travel and transportation expenses, Local lodging. Free file state return only , Additional information. Free file state return only Another individual, paid by taxpayer, Travel Expenses for Another Individual Armed forces reservists, Armed Forces reservists traveling more than 100 miles from home. Free file state return only Commuting, Commuting Expenses Criminal investigations and prosecutions, Federal crime investigation and prosecution. Free file state return only Education, Travel as education. Free file state return only Indefinite work assignments, Indefinite work assignment. Free file state return only Job search, Travel and transportation expenses. Free file state return only Local transportation, Local transportation expenses. Free file state return only Research, Research Expenses of a College Professor Temporary work assignments, Temporary work assignment. Free file state return only Trustees IRA administrative fees, Trustee's Administrative Fees for IRA TTY/TDD information, How To Get Tax Help U Unemployment and education expenses, Education Expenses During Unemployment Unemployment benefit fund contributions, Voluntary Unemployment Benefit Fund Contributions Uniforms, military, Military uniforms. Free file state return only Union dues, Union Dues and Expenses Unreimbursed employee expenses, Unreimbursed Employee Expenses, Military uniforms. Free file state return only W Wagering winnings and losses, Gambling Losses Up to the Amount of Gambling Winnings Work Clothes and uniforms, Work Clothes and Uniforms Impairment-related expenses, Impairment-Related Work Expenses Supplies, Unreimbursed Employee Expenses Tools, Unreimbursed Employee Expenses, Tools Used in Your Work Travel and transportation expenses, Travel, Transportation, Meals, Entertainment, Gifts, and Local Lodging Wristwatches, List of Nondeductible Expenses, Wristwatches Prev  Up     Home   More Online Publications
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IRS Urges Taxpayers to Avoid Becoming Victims of Tax Scams

IR-2011-73, July 11, 2011

IRS YouTube Videos:
Tax Refund Scams :
English | Spanish  |  ASL

WASHINGTON — The Internal Revenue Service today encouraged taxpayers to guard against being misled by unscrupulous individuals trying to persuade them to file false claims for tax credits or rebates.

The IRS has noted an increase in tax-return-related scams, frequently involving unsuspecting taxpayers who normally do not have a filing requirement in the first place. These taxpayers are led to believe they should file a return with the IRS for tax credits, refunds or rebates for which they are not really entitled. Many of these recent scams have been targeted in the South and Midwest.

Most paid tax return preparers provide honest and professional service, but there are some who engage in fraud and other illegal activities.   Unscrupulous promoters deceive people into paying for advice on how to file false claims. Some promoters may charge unreasonable amounts for preparing legitimate returns that could have been prepared for free by the IRS or IRS sponsored Volunteer Income Tax Assistance partners. In other situations, identity theft is involved.

Taxpayers should be wary of any of the following:

  • Fictitious claims for refunds or rebates based on excess or withheld Social Security benefits.
  • Claims that Treasury Form 1080 can be used to transfer funds from the Social Security Administration to the IRS enabling a payout from the IRS.
  • Unfamiliar for-profit tax services teaming up with local churches.
  • Home-made flyers and brochures implying credits or refunds are available without proof of eligibility.
  • Offers of free money with no documentation required.
  • Promises of refunds for “Low Income – No Documents Tax Returns.”
  • Claims for the expired Economic Recovery Credit Program or Recovery Rebate Credit. 
  • Advice on claiming the Earned Income Tax Credit based on exaggerated reports of self-employment income.

In some cases non-existent Social Security refunds or rebates have been the bait used by the con artists.  In other situations, taxpayers deserve the tax credits they are promised but the preparer uses fictitious or inflated information on the return which results in a fraudulent return.

Flyers and advertisements for free money from the IRS, suggesting that the taxpayer can file with little or no documentation, have been appearing in community churches around the country. Promoters are targeting church congregations, exploiting their good intentions and credibility. These schemes also often spread by word of mouth among unsuspecting and well-intentioned people telling their friends and relatives. 
Promoters of these scams often prey upon low income individuals and the elderly. 

They build false hopes and charge people good money for bad advice.  In the end, the victims discover their claims are rejected or the refund barely exceeds what they paid the promoter.  Meanwhile, their money and the promoters are long gone.

Unsuspecting individuals are most likely to get caught up in scams and the IRS is warning all taxpayers, and those that help others prepare returns, to remain vigilant. If it sounds too good to be true, it probably is.

Anyone with questions about a tax credit or program should visit www.IRS.gov, call the IRS toll-free number at 800-829-1040 or visit a local IRS Taxpayer Assistance Center.

For questions about rebates, credit and benefits from other federal agencies contact the relevant agency directly for accurate information. 

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Page Last Reviewed or Updated: 19-Mar-2014

The Free File State Return Only

Free file state return only 7. Free file state return only   Interest Income Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationSSN for joint account. Free file state return only Custodian account for your child. Free file state return only Penalty for failure to supply SSN. Free file state return only Reporting backup withholding. Free file state return only Savings account with parent as trustee. Free file state return only Interest not reported on Form 1099-INT. Free file state return only Nominees. Free file state return only Incorrect amount. Free file state return only Information reporting requirement. Free file state return only Taxable InterestInterest subject to penalty for early withdrawal. Free file state return only Money borrowed to invest in certificate of deposit. Free file state return only U. Free file state return only S. Free file state return only Savings Bonds Education Savings Bond Program U. Free file state return only S. Free file state return only Treasury Bills, Notes, and Bonds Bonds Sold Between Interest Dates Insurance State or Local Government Obligations Original Issue Discount (OID) When To Report Interest IncomeConstructive receipt. Free file state return only How To Report Interest IncomeSchedule B (Form 1040A or 1040). Free file state return only Reporting tax-exempt interest. Free file state return only U. Free file state return only S. Free file state return only savings bond interest previously reported. Free file state return only Reminder Foreign-source income. Free file state return only  If you are a U. Free file state return only S. Free file state return only citizen with interest income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt by U. Free file state return only S. Free file state return only law. Free file state return only This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. Free file state return only Introduction This chapter discusses the following topics. Free file state return only Different types of interest income. Free file state return only What interest is taxable and what interest is nontaxable. Free file state return only When to report interest income. Free file state return only How to report interest income on your tax return. Free file state return only In general, any interest you receive or that is credited to your account and can be withdrawn is taxable income. Free file state return only Exceptions to this rule are discussed later in this chapter. Free file state return only You may be able to deduct expenses you have in earning this income on Schedule A (Form 1040) if you itemize your deductions. Free file state return only See Money borrowed to invest in certificate of deposit , later, and chapter 28. Free file state return only Useful Items - You may want to see: Publication 537 Installment Sales 550 Investment Income and Expenses 1212 Guide to Original Issue Discount (OID) Instruments Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends 8815 Exclusion of Interest From Series EE and I U. Free file state return only S. Free file state return only Savings Bonds Issued After 1989 8818 Optional Form To Record Redemption of Series EE and I U. Free file state return only S. Free file state return only Savings Bonds Issued After 1989 General Information A few items of general interest are covered here. Free file state return only Recordkeeping. Free file state return only You should keep a list showing sources and interest amounts received during the year. Free file state return only Also, keep the forms you receive showing your interest income (Forms 1099-INT, for example) as an important part of your records. Free file state return only Tax on unearned income of certain children. Free file state return only    Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Free file state return only If so, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. Free file state return only If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Free file state return only   Some parents can choose to include the child's interest and dividends on the parent's return. Free file state return only If you can, use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. Free file state return only   For more information about the tax on unearned income of children and the parents' election, see chapter 31. Free file state return only Beneficiary of an estate or trust. Free file state return only   Interest you receive as a beneficiary of an estate or trust is generally taxable income. Free file state return only You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Free file state return only , from the fiduciary. Free file state return only Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Free file state return only Social security number (SSN). Free file state return only   You must give your name and SSN or individual tax identification number (ITIN) to any person required by federal tax law to make a return, statement, or other document that relates to you. Free file state return only This includes payers of interest. Free file state return only If you do not give your SSN or ITIN to the payer of interest, you may have to pay a penalty. Free file state return only SSN for joint account. Free file state return only   If the funds in a joint account belong to one person, list that person's name first on the account and give that person's SSN to the payer. Free file state return only (For information on who owns the funds in a joint account, see Joint accounts , later. Free file state return only ) If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account. Free file state return only This is because only one name and SSN can be shown on Form 1099. Free file state return only   These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. Free file state return only For example, if you open a joint savings account with your child using funds belonging to the child, list the child's name first on the account and give the child's SSN. Free file state return only Custodian account for your child. Free file state return only   If your child is the actual owner of an account that is recorded in your name as custodian for the child, give the child's SSN to the payer. Free file state return only For example, you must give your child's SSN to the payer of interest on an account owned by your child, even though the interest is paid to you as custodian. Free file state return only Penalty for failure to supply SSN. Free file state return only   If you do not give your SSN to the payer of interest, you may have to pay a penalty. Free file state return only See Failure to supply SSN under Penalties in chapter 1. Free file state return only Backup withholding also may apply. Free file state return only Backup withholding. Free file state return only   Your interest income is generally not subject to regular withholding. Free file state return only However, it may be subject to backup withholding to ensure that income tax is collected on the income. Free file state return only Under backup withholding, the payer of interest must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Free file state return only   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. Free file state return only For more information, see Backup Withholding in chapter 4. Free file state return only Reporting backup withholding. Free file state return only   If backup withholding is deducted from your interest income, the payer must give you a Form 1099-INT for the year indicating the amount withheld. Free file state return only The Form 1099-INT will show any backup withholding as “Federal income tax withheld. Free file state return only ” Joint accounts. Free file state return only   If two or more persons hold property (such as a savings account or bond) as joint tenants, tenants by the entirety, or tenants in common, each person's share of any interest from the property is determined by local law. Free file state return only Income from property given to a child. Free file state return only   Property you give as a parent to your child under the Model Gifts of Securities to Minors Act, the Uniform Gifts to Minors Act, or any similar law becomes the child's property. Free file state return only   Income from the property is taxable to the child, except that any part used to satisfy a legal obligation to support the child is taxable to the parent or guardian having that legal obligation. Free file state return only Savings account with parent as trustee. Free file state return only   Interest income from a savings account opened for a minor child, but placed in the name and subject to the order of the parents as trustees, is taxable to the child if, under the law of the state in which the child resides, both of the following are true. Free file state return only The savings account legally belongs to the child. Free file state return only The parents are not legally permitted to use any of the funds to support the child. Free file state return only Form 1099-INT. Free file state return only   Interest income is generally reported to you on Form 1099-INT, or a similar statement, by banks, savings and loans, and other payers of interest. Free file state return only This form shows you the interest you received during the year. Free file state return only Keep this form for your records. Free file state return only You do not have to attach it to your tax return. Free file state return only   Report on your tax return the total interest income you receive for the tax year. Free file state return only Interest not reported on Form 1099-INT. Free file state return only   Even if you do not receive Form 1099-INT, you must still report all of your interest income. Free file state return only For example, you may receive distributive shares of interest from partnerships or S corporations. Free file state return only This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deduction, Credits, etc. Free file state return only , or Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Free file state return only Nominees. Free file state return only   Generally, if someone receives interest as a nominee for you, that person must give you a Form 1099-INT showing the interest received on your behalf. Free file state return only   If you receive a Form 1099-INT that includes amounts belonging to another person, see the discussion on nominee distributions under How To Report Interest Income in chapter 1 of Publication 550, or Schedule B (Form 1040A or 1040) instructions. Free file state return only Incorrect amount. Free file state return only   If you receive a Form 1099-INT that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Free file state return only The new Form 1099-INT you receive will be marked “Corrected. Free file state return only ” Form 1099-OID. Free file state return only   Reportable interest income also may be shown on Form 1099-OID, Original Issue Discount. Free file state return only For more information about amounts shown on this form, see Original Issue Discount (OID) , later in this chapter. Free file state return only Exempt-interest dividends. Free file state return only   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. Free file state return only (However, see Information reporting requirement , next. Free file state return only ) Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Free file state return only You do not reduce your basis for distributions that are exempt-interest dividends. Free file state return only Information reporting requirement. Free file state return only   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file. Free file state return only This is an information reporting requirement and does not change the exempt-interest dividends into taxable income. Free file state return only Note. Free file state return only Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Free file state return only See Alternative Minimum Tax (AMT) in chapter 30 for more information. Free file state return only Chapter 1 of Publication 550 contains a discussion on private activity bonds under State or Local Government Obligations. Free file state return only Interest on VA dividends. Free file state return only   Interest on insurance dividends left on deposit with the Department of Veterans Affairs (VA) is not taxable. Free file state return only This includes interest paid on dividends on converted United States Government Life Insurance and on National Service Life Insurance policies. Free file state return only Individual retirement arrangements (IRAs). Free file state return only   Interest on a Roth IRA generally is not taxable. Free file state return only Interest on a traditional IRA is tax deferred. Free file state return only You generally do not include it in your income until you make withdrawals from the IRA. Free file state return only See chapter 17. Free file state return only Taxable Interest Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. Free file state return only The following are some sources of taxable interest. Free file state return only Dividends that are actually interest. Free file state return only   Certain distributions commonly called dividends are actually interest. Free file state return only You must report as interest so-called “dividends” on deposits or on share accounts in: Cooperative banks, Credit unions, Domestic building and loan associations, Domestic savings and loan associations, Federal savings and loan associations, and Mutual savings banks. Free file state return only  The “dividends” will be shown as interest income on Form 1099-INT. Free file state return only Money market funds. Free file state return only   Money market funds pay dividends and are offered by nonbank financial institutions, such as mutual funds and stock brokerage houses. Free file state return only Generally, amounts you receive from money market funds should be reported as dividends, not as interest. Free file state return only Certificates of deposit and other deferred interest accounts. Free file state return only   If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. Free file state return only You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. Free file state return only The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. Free file state return only If interest is deferred for more than 1 year, see Original Issue Discount (OID) , later. Free file state return only Interest subject to penalty for early withdrawal. Free file state return only   If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. Free file state return only You must report the total amount of interest paid or credited to your account during the year, without subtracting the penalty. Free file state return only See Penalty on early withdrawal of savings in chapter 1 of Publication 550 for more information on how to report the interest and deduct the penalty. Free file state return only Money borrowed to invest in certificate of deposit. Free file state return only   The interest you pay on money borrowed from a bank or savings institution to meet the minimum deposit required for a certificate of deposit from the institution and the interest you earn on the certificate are two separate items. Free file state return only You must report the total interest you earn on the certificate in your income. Free file state return only If you itemize deductions, you can deduct the interest you pay as investment interest, up to the amount of your net investment income. Free file state return only See Interest Expenses in chapter 3 of Publication 550. Free file state return only Example. Free file state return only You deposited $5,000 with a bank and borrowed $5,000 from the bank to make up the $10,000 minimum deposit required to buy a 6-month certificate of deposit. Free file state return only The certificate earned $575 at maturity in 2013, but you received only $265, which represented the $575 you earned minus $310 interest charged on your $5,000 loan. Free file state return only The bank gives you a Form 1099-INT for 2013 showing the $575 interest you earned. Free file state return only The bank also gives you a statement showing that you paid $310 interest for 2013. Free file state return only You must include the $575 in your income. Free file state return only If you itemize your deductions on Schedule A (Form 1040), you can deduct $310, subject to the net investment income limit. Free file state return only Gift for opening account. Free file state return only   If you receive noncash gifts or services for making deposits or for opening an account in a savings institution, you may have to report the value as interest. Free file state return only   For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. Free file state return only For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. Free file state return only The value is determined by the cost to the financial institution. Free file state return only Example. Free file state return only You open a savings account at your local bank and deposit $800. Free file state return only The account earns $20 interest. Free file state return only You also receive a $15 calculator. Free file state return only If no other interest is credited to your account during the year, the Form 1099-INT you receive will show $35 interest for the year. Free file state return only You must report $35 interest income on your tax return. Free file state return only Interest on insurance dividends. Free file state return only   Interest on insurance dividends left on deposit with an insurance company that can be withdrawn annually is taxable to you in the year it is credited to your account. Free file state return only However, if you can withdraw it only on the anniversary date of the policy (or other specified date), the interest is taxable in the year that date occurs. Free file state return only Prepaid insurance premiums. Free file state return only   Any increase in the value of prepaid insurance premiums, advance premiums, or premium deposit funds is interest if it is applied to the payment of premiums due on insurance policies or made available for you to withdraw. Free file state return only U. Free file state return only S. Free file state return only obligations. Free file state return only   Interest on U. Free file state return only S. Free file state return only obligations, such as U. Free file state return only S. Free file state return only Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes. Free file state return only Interest on tax refunds. Free file state return only   Interest you receive on tax refunds is taxable income. Free file state return only Interest on condemnation award. Free file state return only   If the condemning authority pays you interest to compensate you for a delay in payment of an award, the interest is taxable. Free file state return only Installment sale payments. Free file state return only   If a contract for the sale or exchange of property provides for deferred payments, it also usually provides for interest payable with the deferred payments. Free file state return only That interest is taxable when you receive it. Free file state return only If little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest. Free file state return only See Unstated Interest and Original Issue Discount in Publication 537, Installment Sales. Free file state return only Interest on annuity contract. Free file state return only   Accumulated interest on an annuity contract you sell before its maturity date is taxable. Free file state return only Usurious interest. Free file state return only   Usurious interest is interest charged at an illegal rate. Free file state return only This is taxable as interest unless state law automatically changes it to a payment on the principal. Free file state return only Interest income on frozen deposits. Free file state return only   Exclude from your gross income interest on frozen deposits. Free file state return only A deposit is frozen if, at the end of the year, you cannot withdraw any part of the deposit because: The financial institution is bankrupt or insolvent, or The state where the institution is located has placed limits on withdrawals because other financial institutions in the state are bankrupt or insolvent. Free file state return only   The amount of interest you must exclude is the interest that was credited on the frozen deposits minus the sum of: The net amount you withdrew from these deposits during the year, and The amount you could have withdrawn as of the end of the year (not reduced by any penalty for premature withdrawals of a time deposit). Free file state return only If you receive a Form 1099-INT for interest income on deposits that were frozen at the end of 2013, see Frozen deposits under How To Report Interest Income in chapter 1 of Publication 550, for information about reporting this interest income exclusion on your tax return. Free file state return only   The interest you exclude is treated as credited to your account in the following year. Free file state return only You must include it in income in the year you can withdraw it. Free file state return only Example. Free file state return only $100 of interest was credited on your frozen deposit during the year. Free file state return only You withdrew $80 but could not withdraw any more as of the end of the year. Free file state return only You must include $80 in your income and exclude $20 from your income for the year. Free file state return only You must include the $20 in your income for the year you can withdraw it. Free file state return only Bonds traded flat. Free file state return only   If you buy a bond at a discount when interest has been defaulted or when the interest has accrued but has not been paid, the transaction is described as trading a bond flat. Free file state return only The defaulted or unpaid interest is not income and is not taxable as interest if paid later. Free file state return only When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. Free file state return only Interest that accrues after the date of purchase, however, is taxable interest income for the year it is received or accrued. Free file state return only See Bonds Sold Between Interest Dates , later, for more information. Free file state return only Below-market loans. Free file state return only   In general, a below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. Free file state return only See Below-Market Loans in chapter 1 of Publication 550 for more information. Free file state return only U. Free file state return only S. Free file state return only Savings Bonds This section provides tax information on U. Free file state return only S. Free file state return only savings bonds. Free file state return only It explains how to report the interest income on these bonds and how to treat transfers of these bonds. Free file state return only For other information on U. Free file state return only S. Free file state return only savings bonds, write to:  For series EE and I paper savings bonds: Bureau of the Public Debt Division of Customer Assistance P. Free file state return only O. Free file state return only Box 7012 Parkersburg, WV 26106-7012  For series EE and I electronic bonds: Bureau of the Public Debt Division of Customer Assistance P. Free file state return only O. Free file state return only Box 7015 Parkersburg, WV 26106–7015  For series HH/H: Bureau of the Public Debt Division of Customer Assistance P. Free file state return only O. Free file state return only Box 2186 Parkersburg, WV 26106-2186 Or, on the Internet, visit: www. Free file state return only treasurydirect. Free file state return only gov/indiv/indiv. Free file state return only htm. Free file state return only Accrual method taxpayers. Free file state return only   If you use an accrual method of accounting, you must report interest on U. Free file state return only S. Free file state return only savings bonds each year as it accrues. Free file state return only You cannot postpone reporting interest until you receive it or until the bonds mature. Free file state return only Accrual methods of accounting are explained in chapter 1 under Accounting Methods . Free file state return only Cash method taxpayers. Free file state return only   If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U. Free file state return only S. Free file state return only savings bonds when you receive it. Free file state return only The cash method of accounting is explained in chapter 1 under Accounting Methods. Free file state return only But see Reporting options for cash method taxpayers , later. Free file state return only Series HH bonds. Free file state return only    These bonds were issued at face value. Free file state return only Interest is paid twice a year by direct deposit to your bank account. Free file state return only If you are a cash method taxpayer, you must report interest on these bonds as income in the year you receive it. Free file state return only   Series HH bonds were first offered in 1980 and last offered in August 2004. Free file state return only Before 1980, series H bonds were issued. Free file state return only Series H bonds are treated the same as series HH bonds. Free file state return only If you are a cash method taxpayer, you must report the interest when you receive it. Free file state return only   Series H bonds have a maturity period of 30 years. Free file state return only Series HH bonds mature in 20 years. Free file state return only The last series H bonds matured in 2009. Free file state return only Series EE and series I bonds. Free file state return only   Interest on these bonds is payable when you redeem the bonds. Free file state return only The difference between the purchase price and the redemption value is taxable interest. Free file state return only Series EE bonds. Free file state return only   Series EE bonds were first offered in January 1980 and have a maturity period of 30 years. Free file state return only   Before July 1980, series E bonds were issued. Free file state return only The original 10-year maturity period of series E bonds has been extended to 40 years for bonds issued before December 1965 and 30 years for bonds issued after November 1965. Free file state return only Paper series EE and series E bonds are issued at a discount. Free file state return only The face value is payable to you at maturity. Free file state return only Electronic series EE bonds are issued at their face value. Free file state return only The face value plus accrued interest is payable to you at maturity. Free file state return only As of January 1, 2012, paper savings bonds were no longer sold at financial institutions. Free file state return only   Owners of paper series EE bonds can convert them to electronic bonds. Free file state return only These converted bonds do not retain the denomination listed on the paper certificate but are posted at their purchase price (with accrued interest). Free file state return only Series I bonds. Free file state return only   Series I bonds were first offered in 1998. Free file state return only These are inflation-indexed bonds issued at their face amount with a maturity period of 30 years. Free file state return only The face value plus all accrued interest is payable to you at maturity. Free file state return only Reporting options for cash method taxpayers. Free file state return only   If you use the cash method of reporting income, you can report the interest on series EE, series E, and series I bonds in either of the following ways. Free file state return only Method 1. Free file state return only Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year they mature. Free file state return only (However, see Savings bonds traded , later. Free file state return only )  Note. Free file state return only Series EE bonds issued in 1983 matured in 2013. Free file state return only If you have used method 1, you generally must report the interest on these bonds on your 2013 return. Free file state return only The last series E bonds were issued in 1980 and matured in 2010. Free file state return only If you used method 1, you generally should have reported the interest on these bonds on your 2010 return. Free file state return only Method 2. Free file state return only Choose to report the increase in redemption value as interest each year. Free file state return only You must use the same method for all series EE, series E, and series I bonds you own. Free file state return only If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1. Free file state return only    If you plan to cash your bonds in the same year you will pay for higher education expenses, you may want to use method 1 because you may be able to exclude the interest from your income. Free file state return only To learn how, see Education Savings Bond Program, later. Free file state return only Change from method 1. Free file state return only   If you want to change your method of reporting the interest from method 1 to method 2, you can do so without permission from the IRS. Free file state return only In the year of change you must report all interest accrued to date and not previously reported for all your bonds. Free file state return only   Once you choose to report the interest each year, you must continue to do so for all series EE, series E, and series I bonds you own and for any you get later, unless you request permission to change, as explained next. Free file state return only Change from method 2. Free file state return only   To change from method 2 to method 1, you must request permission from the IRS. Free file state return only Permission for the change is automatically granted if you send the IRS a statement that meets all the following requirements. Free file state return only You have typed or printed the following number at the top: “131. Free file state return only ” It includes your name and social security number under “131. Free file state return only ” It includes the year of change (both the beginning and ending dates). Free file state return only It identifies the savings bonds for which you are requesting this change. Free file state return only It includes your agreement to: Report all interest on any bonds acquired during or after the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, and Report all interest on the bonds acquired before the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, with the exception of the interest reported in prior tax years. Free file state return only   You must attach this statement to your tax return for the year of change, which you must file by the due date (including extensions). Free file state return only   You can have an automatic extension of 6 months from the due date of your return for the year of change (excluding extensions) to file the statement with an amended return. Free file state return only On the statement, type or print “Filed pursuant to section 301. Free file state return only 9100-2. Free file state return only ” To get this extension, you must have filed your original return for the year of the change by the due date (including extensions). Free file state return only    By the date you file the original statement with your return, you must also send a signed copy to the address below. Free file state return only   Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) P. Free file state return only O. Free file state return only Box 7604 Benjamin Franklin Station Washington, DC 20044   If you use a private delivery service, send the signed copy to the address below. Free file state return only   Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) Room 5336 1111 Constitution Avenue, NW  Washington, DC 20224   Instead of filing this statement, you can request permission to change from method 2 to method 1 by filing Form 3115, Application for Change in Accounting Method. Free file state return only In that case, follow the form instructions for an automatic change. Free file state return only No user fee is required. Free file state return only Co-owners. Free file state return only   If a U. Free file state return only S. Free file state return only savings bond is issued in the names of co-owners, such as you and your child or you and your spouse, interest on the bond is generally taxable to the co-owner who bought the bond. Free file state return only One co-owner's funds used. Free file state return only    If you used your funds to buy the bond, you must pay the tax on the interest. Free file state return only This is true even if you let the other co-owner redeem the bond and keep all the proceeds. Free file state return only Under these circumstances, the co-owner who redeemed the bond will receive a Form 1099-INT at the time of redemption and must provide you with another Form 1099-INT showing the amount of interest from the bond taxable to you. Free file state return only The co-owner who redeemed the bond is a “nominee. Free file state return only ” See Nominee distributions under How To Report Interest Income in chapter 1 of Publication 550 for more information about how a person who is a nominee reports interest income belonging to another person. Free file state return only Both co-owners' funds used. Free file state return only   If you and the other co-owner each contribute part of the bond's purchase price, the interest is generally taxable to each of you, in proportion to the amount each of you paid. Free file state return only Community property. Free file state return only   If you and your spouse live in a community property state and hold bonds as community property, one-half of the interest is considered received by each of you. Free file state return only If you file separate returns, each of you generally must report one-half of the bond interest. Free file state return only For more information about community property, see Publication 555. Free file state return only Table 7-1. Free file state return only   These rules are also shown in Table 7-1. Free file state return only Ownership transferred. Free file state return only   If you bought series E, series EE, or series I bonds entirely with your own funds and had them reissued in your co-owner's name or beneficiary's name alone, you must include in your gross income for the year of reissue all interest that you earned on these bonds and have not previously reported. Free file state return only But, if the bonds were reissued in your name alone, you do not have to report the interest accrued at that time. Free file state return only   This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to divorce. Free file state return only Purchased jointly. Free file state return only   If you and a co-owner each contributed funds to buy series E, series EE, or series I bonds jointly and later have the bonds reissued in the co-owner's name alone, you must include in your gross income for the year of reissue your share of all the interest earned on the bonds that you have not previously reported. Free file state return only The former co-owner does not have to include in gross income at the time of reissue his or her share of the interest earned that was not reported before the transfer. Free file state return only This interest, however, as well as all interest earned after the reissue, is income to the former co-owner. Free file state return only   This income-reporting rule also applies when the bonds are reissued in the name of your former co-owner and a new co-owner. Free file state return only But the new co-owner will report only his or her share of the interest earned after the transfer. Free file state return only   If bonds that you and a co-owner bought jointly are reissued to each of you separately in the same proportion as your contribution to the purchase price, neither you nor your co-owner has to report at that time the interest earned before the bonds were reissued. Free file state return only    Table 7-1. Free file state return only Who Pays the Tax on U. Free file state return only S. Free file state return only Savings Bond Interest IF . Free file state return only . Free file state return only . Free file state return only THEN the interest must be reported by . Free file state return only . Free file state return only . Free file state return only you buy a bond in your name and the name of another person as co-owners, using only your own funds you. Free file state return only you buy a bond in the name of another person, who is the sole owner of the bond the person for whom you bought the bond. Free file state return only you and another person buy a bond as co-owners, each contributing part of the purchase price both you and the other co-owner, in proportion to the amount each paid for the bond. Free file state return only you and your spouse, who live in a community property state, buy a bond that is community property you and your spouse. Free file state return only If you file separate returns, both you and your spouse generally report one-half of the interest. Free file state return only Example 1. Free file state return only You and your spouse each spent an equal amount to buy a $1,000 series EE savings bond. Free file state return only The bond was issued to you and your spouse as co-owners. Free file state return only You both postpone reporting interest on the bond. Free file state return only You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Free file state return only At that time neither you nor your spouse has to report the interest earned to the date of reissue. Free file state return only Example 2. Free file state return only You bought a $1,000 series EE savings bond entirely with your own funds. Free file state return only The bond was issued to you and your spouse as co-owners. Free file state return only You both postpone reporting interest on the bond. Free file state return only You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Free file state return only You must report half the interest earned to the date of reissue. Free file state return only Transfer to a trust. Free file state return only   If you own series E, series EE, or series I bonds and transfer them to a trust, giving up all rights of ownership, you must include in your income for that year the interest earned to the date of transfer if you have not already reported it. Free file state return only However, if you are considered the owner of the trust and if the increase in value both before and after the transfer continues to be taxable to you, you can continue to defer reporting the interest earned each year. Free file state return only You must include the total interest in your income in the year you cash or dispose of the bonds or the year the bonds finally mature, whichever is earlier. Free file state return only   The same rules apply to previously unreported interest on series EE or series E bonds if the transfer to a trust consisted of series HH or series H bonds you acquired in a trade for the series EE or series E bonds. Free file state return only See Savings bonds traded , later. Free file state return only Decedents. Free file state return only   The manner of reporting interest income on series E, series EE, or series I bonds, after the death of the owner (decedent), depends on the accounting and income-reporting methods previously used by the decedent. Free file state return only This is explained in chapter 1 of Publication 550. Free file state return only Savings bonds traded. Free file state return only   If you postponed reporting the interest on your series EE or series E bonds, you did not recognize taxable income when you traded the bonds for series HH or series H bonds, unless you received cash in the trade. Free file state return only (You cannot trade series I bonds for series HH bonds. Free file state return only After August 31, 2004, you cannot trade any other series of bonds for series HH bonds. Free file state return only ) Any cash you received is income up to the amount of the interest earned on the bonds traded. Free file state return only When your series HH or series H bonds mature, or if you dispose of them before maturity, you report as interest the difference between their redemption value and your cost. Free file state return only Your cost is the sum of the amount you paid for the traded series EE or series E bonds plus any amount you had to pay at the time of the trade. Free file state return only Example. Free file state return only You traded series EE bonds (on which you postponed reporting the interest) for $2,500 in series HH bonds and $223 in cash. Free file state return only You reported the $223 as taxable income on your tax return. Free file state return only At the time of the trade, the series EE bonds had accrued interest of $523 and a redemption value of $2,723. Free file state return only You hold the series HH bonds until maturity, when you receive $2,500. Free file state return only You must report $300 as interest income in the year of maturity. Free file state return only This is the difference between their redemption value, $2,500, and your cost, $2,200 (the amount you paid for the series EE bonds). Free file state return only (It is also the difference between the accrued interest of $523 on the series EE bonds and the $223 cash received on the trade. Free file state return only ) Choice to report interest in year of trade. Free file state return only   You could have chosen to treat all of the previously unreported accrued interest on the series EE or series E bonds traded for series HH bonds as income in the year of the trade. Free file state return only If you made this choice, it is treated as a change from method 1. Free file state return only See Change from method 1 under Series EE and series I bonds, earlier. Free file state return only Form 1099-INT for U. Free file state return only S. Free file state return only savings bonds interest. Free file state return only   When you cash a bond, the bank or other payer that redeems it must give you a Form 1099-INT if the interest part of the payment you receive is $10 or more. Free file state return only Box 3 of your Form 1099-INT should show the interest as the difference between the amount you received and the amount paid for the bond. Free file state return only However, your Form 1099-INT may show more interest than you have to include on your income tax return. Free file state return only For example, this may happen if any of the following are true. Free file state return only You chose to report the increase in the redemption value of the bond each year. Free file state return only The interest shown on your Form 1099-INT will not be reduced by amounts previously included in income. Free file state return only You received the bond from a decedent. Free file state return only The interest shown on your Form 1099-INT will not be reduced by any interest reported by the decedent before death, or on the decedent's final return, or by the estate on the estate's income tax return. Free file state return only Ownership of the bond was transferred. Free file state return only The interest shown on your Form 1099-INT will not be reduced by interest that accrued before the transfer. Free file state return only You were named as a co-owner, and the other co-owner contributed funds to buy the bond. Free file state return only The interest shown on your Form 1099-INT will not be reduced by the amount you received as nominee for the other co-owner. Free file state return only (See Co-owners , earlier in this chapter, for more information about the reporting requirements. Free file state return only ) You received the bond in a taxable distribution from a retirement or profit-sharing plan. Free file state return only The interest shown on your Form 1099-INT will not be reduced by the interest portion of the amount taxable as a distribution from the plan and not taxable as interest. Free file state return only (This amount is generally shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Free file state return only , for the year of distribution. Free file state return only )   For more information on including the correct amount of interest on your return, see How To Report Interest Income , later. Free file state return only Publication 550 includes examples showing how to report these amounts. Free file state return only    Interest on U. Free file state return only S. Free file state return only savings bonds is exempt from state and local taxes. Free file state return only The Form 1099-INT you receive will indicate the amount that is for U. Free file state return only S. Free file state return only savings bond interest in box 3. Free file state return only Education Savings Bond Program You may be able to exclude from income all or part of the interest you receive on the redemption of qualified U. Free file state return only S. Free file state return only savings bonds during the year if you pay qualified higher educational expenses during the same year. Free file state return only This exclusion is known as the Education Savings Bond Program. Free file state return only You do not qualify for this exclusion if your filing status is married filing separately. Free file state return only Form 8815. Free file state return only   Use Form 8815 to figure your exclusion. Free file state return only Attach the form to your Form 1040 or Form 1040A. Free file state return only Qualified U. Free file state return only S. Free file state return only savings bonds. Free file state return only   A qualified U. Free file state return only S. Free file state return only savings bond is a series EE bond issued after 1989 or a series I bond. Free file state return only The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). Free file state return only You must be at least 24 years old before the bond's issue date. Free file state return only For example, a bond bought by a parent and issued in the name of his or her child under age 24 does not qualify for the exclusion by the parent or child. Free file state return only    The issue date of a bond may be earlier than the date the bond is purchased because the issue date assigned to a bond is the first day of the month in which it is purchased. Free file state return only Beneficiary. Free file state return only   You can designate any individual (including a child) as a beneficiary of the bond. Free file state return only Verification by IRS. Free file state return only   If you claim the exclusion, the IRS will check it by using bond redemption information from the Department of the Treasury. Free file state return only Qualified expenses. Free file state return only   Qualified higher educational expenses are tuition and fees required for you, your spouse, or your dependent (for whom you claim an exemption) to attend an eligible educational institution. Free file state return only   Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account. Free file state return only   Qualified expenses do not include expenses for room and board or for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. Free file state return only Eligible educational institutions. Free file state return only   These institutions include most public, private, and nonprofit universities, colleges, and vocational schools that are accredited and eligible to participate in student aid programs run by the U. Free file state return only S. Free file state return only Department of Education. Free file state return only Reduction for certain benefits. Free file state return only   You must reduce your qualified higher educational expenses by all of the following tax-free benefits. Free file state return only Tax-free part of scholarships and fellowships (see Scholarships and fellowships in chapter 12). Free file state return only Expenses used to figure the tax-free portion of distributions from a Coverdell ESA. Free file state return only Expenses used to figure the tax-free portion of distributions from a qualified tuition program. Free file state return only Any tax-free payments (other than gifts or inheritances) received for educational expenses, such as Veterans' educational assistance benefits, Qualified tuition reductions, or Employer-provided educational assistance. Free file state return only Any expense used in figuring the American Opportunity and lifetime learning credits. Free file state return only Amount excludable. Free file state return only   If the total proceeds (interest and principal) from the qualified U. Free file state return only S. Free file state return only savings bonds you redeem during the year are not more than your adjusted qualified higher educational expenses for the year, you may be able to exclude all of the interest. Free file state return only If the proceeds are more than the expenses, you may be able to exclude only part of the interest. Free file state return only   To determine the excludable amount, multiply the interest part of the proceeds by a fraction. Free file state return only The numerator of the fraction is the qualified higher educational expenses you paid during the year. Free file state return only The denominator of the fraction is the total proceeds you received during the year. Free file state return only Example. Free file state return only In February 2013, Mark and Joan, a married couple, cashed a qualified series EE U. Free file state return only S. Free file state return only savings bond they bought in April 1997. Free file state return only They received proceeds of $8,372 representing principal of $5,000 and interest of $3,372. Free file state return only In 2013, they paid $4,000 of their daughter's college tuition. Free file state return only They are not claiming an education credit for that amount, and their daughter does not have any tax-free educational assistance. Free file state return only They can exclude $1,611 ($3,372 × ($4,000 ÷ $8,372)) of interest in 2013. Free file state return only They must pay tax on the remaining $1,761 ($3,372 − $1,611) interest. Free file state return only Modified adjusted gross income limit. Free file state return only   The interest exclusion is limited if your modified adjusted gross income (modified AGI) is: $74,700 to $89,700 for taxpayers filing single or head of household, and $112,050 to $142,050 for married taxpayers filing jointly or for a qualifying widow(er) with dependent child. Free file state return only You do not qualify for the interest exclusion if your modified AGI is equal to or more than the upper limit for your filing status. Free file state return only   Modified AGI, for purposes of this exclusion, is adjusted gross income (Form 1040, line 37, or Form 1040A, line 21) figured before the interest exclusion, and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion and deduction, Exclusion of income for bona fide residents of American Samoa, Exclusion for income from Puerto Rico, Exclusion for adoption benefits received under an employer's adoption assistance program, Deduction for tuition and fees, Deduction for student loan interest, and Deduction for domestic production activities. Free file state return only   Use the Line 9 Worksheet in the Form 8815 instructions to figure your modified AGI. Free file state return only If you claim any of the exclusion or deduction items listed above (except items 6, 7, and 8), add the amount of the exclusion or deduction (except items 6, 7, and 8) to the amount on line 5 of the worksheet, and enter the total on Form 8815, line 9, as your modified AGI. Free file state return only   If you have investment interest expense incurred to earn royalties and other investment income, see Education Savings Bond Program in chapter 1 of Publication 550. Free file state return only Recordkeeping. Free file state return only If you claim the interest exclusion, you must keep a written record of the qualified U. Free file state return only S. Free file state return only savings bonds you redeem. Free file state return only Your record must include the serial number, issue date, face value, and total redemption proceeds (principal and interest) of each bond. Free file state return only You can use Form 8818 to record this information. Free file state return only You should also keep bills, receipts, canceled checks, or other documentation that shows you paid qualified higher educational expenses during the year. Free file state return only U. Free file state return only S. Free file state return only Treasury Bills, Notes, and Bonds Treasury bills, notes, and bonds are direct debts (obligations) of the U. Free file state return only S. Free file state return only Government. Free file state return only Taxation of interest. Free file state return only   Interest income from Treasury bills, notes, and bonds is subject to federal income tax but is exempt from all state and local income taxes. Free file state return only You should receive Form 1099-INT showing the interest (in box 3) paid to you for the year. Free file state return only   Payments of principal and interest generally will be credited to your designated checking or savings account by direct deposit through the TreasuryDirect® system. Free file state return only Treasury bills. Free file state return only   These bills generally have a 4-week, 13-week, 26-week, or 52-week maturity period. Free file state return only They are generally issued at a discount in the amount of $100 and multiples of $100. Free file state return only The difference between the discounted price you pay for the bills and the face value you receive at maturity is interest income. Free file state return only Generally, you report this interest income when the bill is paid at maturity. Free file state return only If you paid a premium for a bill (more than the face value), you generally report the premium as a section 171 deduction when the bill is paid at maturity. Free file state return only Treasury notes and bonds. Free file state return only   Treasury notes have maturity periods of more than 1 year, ranging up to 10 years. Free file state return only Maturity periods for Treasury bonds are longer than 10 years. Free file state return only Both generally are issued in denominations of $100 to $1 million and generally pay interest every 6 months. Free file state return only Generally, you report this interest for the year paid. Free file state return only For more information, see U. Free file state return only S. Free file state return only Treasury Bills, Notes, and Bonds in chapter 1 of Publication 550. Free file state return only For other information on Treasury notes or bonds, write to:  Bureau of the Public Debt P. Free file state return only O. Free file state return only Box 7015 Parkersburg, WV 26106-7015 Or, on the Internet, visit: www. Free file state return only treasurydirect. Free file state return only gov/indiv/indiv. Free file state return only htm. Free file state return only For information on series EE, series I, and series HH savings bonds, see U. Free file state return only S. Free file state return only Savings Bonds , earlier. Free file state return only Treasury inflation-protected securities (TIPS). Free file state return only   These securities pay interest twice a year at a fixed rate, based on a principal amount adjusted to take into account inflation and deflation. Free file state return only For the tax treatment of these securities, see Inflation-Indexed Debt Instruments under Original Issue Discount (OID), in Publication 550. Free file state return only Bonds Sold Between Interest Dates If you sell a bond between interest payment dates, part of the sales price represents interest accrued to the date of sale. Free file state return only You must report that part of the sales price as interest income for the year of sale. Free file state return only If you buy a bond between interest payment dates, part of the purchase price represents interest accrued before the date of purchase. Free file state return only When that interest is paid to you, treat it as a return of your capital investment, rather than interest income, by reducing your basis in the bond. Free file state return only See Accrued interest on bonds under How To Report Interest Income in chapter 1 of Publication 550 for information on reporting the payment. Free file state return only Insurance Life insurance proceeds paid to you as beneficiary of the insured person are usually not taxable. Free file state return only But if you receive the proceeds in installments, you must usually report a part of each installment payment as interest income. Free file state return only For more information about insurance proceeds received in installments, see Publication 525, Taxable and Nontaxable Income. Free file state return only Annuity. Free file state return only   If you buy an annuity with life insurance proceeds, the annuity payments you receive are taxed as pension and annuity income from a nonqualified plan, not as interest income. Free file state return only See chapter 10 for information on pension and annuity income from nonqualified plans. Free file state return only State or Local Government Obligations Interest on a bond used to finance government operations generally is not taxable if the bond is issued by a state, the District of Columbia, a possession of the United States, or any of their political subdivisions. Free file state return only Bonds issued after 1982 (including tribal economic development bonds issued after February 17, 2009) by an Indian tribal government are treated as issued by a state. Free file state return only Interest on these bonds is generally tax exempt if the bonds are part of an issue of which substantially all proceeds are to be used in the exercise of any essential government function. Free file state return only For information on federally guaranteed bonds, mortgage revenue bonds, arbitrage bonds, private activity bonds, qualified tax credit bonds, and Build America bonds, see State or Local Government Obligations in chapter 1 of Publication 550. Free file state return only Information reporting requirement. Free file state return only   If you must file a tax return, you are required to show any tax-exempt interest you received on your return. Free file state return only This is an information reporting requirement only. Free file state return only It does not change tax-exempt interest to taxable interest. Free file state return only Original Issue Discount (OID) Original issue discount (OID) is a form of interest. Free file state return only You generally include OID in your income as it accrues over the term of the debt instrument, whether or not you receive any payments from the issuer. Free file state return only A debt instrument generally has OID when the instrument is issued for a price that is less than its stated redemption price at maturity. Free file state return only OID is the difference between the stated redemption price at maturity and the issue price. Free file state return only All debt instruments that pay no interest before maturity are presumed to be issued at a discount. Free file state return only Zero coupon bonds are one example of these instruments. Free file state return only The OID accrual rules generally do not apply to short-term obligations (those with a fixed maturity date of 1 year or less from date of issue). Free file state return only See Discount on Short-Term Obligations in chapter 1 of Publication 550. Free file state return only De minimis OID. Free file state return only   You can treat the discount as zero if it is less than one-fourth of 1% (. Free file state return only 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. Free file state return only This small discount is known as “de minimis” OID. Free file state return only Example 1. Free file state return only You bought a 10-year bond with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. Free file state return only One-fourth of 1% of $1,000 (stated redemption price) times 10 (the number of full years from the date of original issue to maturity) equals $25. Free file state return only Because the $20 discount is less than $25, the OID is treated as zero. Free file state return only (If you hold the bond at maturity, you will recognize $20 ($1,000 − $980) of capital gain. Free file state return only ) Example 2. Free file state return only The facts are the same as in Example 1, except that the bond was issued at $950. Free file state return only The OID is $50. Free file state return only Because the $50 discount is more than the $25 figured in Example 1, you must include the OID in income as it accrues over the term of the bond. Free file state return only Debt instrument bought after original issue. Free file state return only   If you buy a debt instrument with de minimis OID at a premium, the discount is not includible in income. Free file state return only If you buy a debt instrument with de minimis OID at a discount, the discount is reported under the market discount rules. Free file state return only See Market Discount Bonds in chapter 1 of Publication 550. Free file state return only Exceptions to reporting OID. Free file state return only   The OID rules discussed in this chapter do not apply to the following debt instruments. Free file state return only Tax-exempt obligations. Free file state return only (However, see Stripped tax-exempt obligations under Stripped Bonds and Coupons in chapter 1 of Publication 550). Free file state return only U. Free file state return only S. Free file state return only savings bonds. Free file state return only Short-term debt instruments (those with a fixed maturity date of not more than 1 year from the date of issue). Free file state return only Obligations issued by an individual before March 2, 1984. Free file state return only Loans between individuals if all the following are true. Free file state return only The lender is not in the business of lending money. Free file state return only The amount of the loan, plus the amount of any outstanding prior loans between the same individuals, is $10,000 or less. Free file state return only Avoiding any federal tax is not one of the principal purposes of the loan. Free file state return only Form 1099-OID. Free file state return only   The issuer of the debt instrument (or your broker if you held the instrument through a broker) should give you Form 1099-OID, or a similar statement, if the total OID for the calendar year is $10 or more. Free file state return only Form 1099-OID will show, in box 1, the amount of OID for the part of the year that you held the bond. Free file state return only It also will show, in box 2, the stated interest you must include in your income. Free file state return only A copy of Form 1099-OID will be sent to the IRS. Free file state return only Do not file your copy with your return. Free file state return only Keep it for your records. Free file state return only   In most cases, you must report the entire amount in boxes 1 and 2 of Form 1099-OID as interest income. Free file state return only But see Refiguring OID shown on Form 1099-OID, later in this discussion, for more information. Free file state return only Form 1099-OID not received. Free file state return only   If you had OID for the year but did not receive a Form 1099-OID, you can find tables on IRS. Free file state return only gov that list total OID on certain debt instruments and have information that will help you figure OID. Free file state return only For the latest OID tables, go to www. Free file state return only irs. Free file state return only gov and enter “OID tables” in the Search box. Free file state return only If your debt instrument is not listed, consult the issuer for further information about the accrued OID for the year. Free file state return only Nominee. Free file state return only   If someone else is the holder of record (the registered owner) of an OID instrument belonging to you and receives a Form 1099-OID on your behalf, that person must give you a Form 1099-OID. Free file state return only Refiguring OID shown on Form 1099-OID. Free file state return only   You must refigure the OID shown in box 1 or box 8 of Form 1099-OID if either of the following apply. Free file state return only You bought the debt instrument after its original issue and paid a premium or an acquisition premium. Free file state return only The debt instrument is a stripped bond or a stripped coupon (including certain zero coupon instruments). Free file state return only For information about figuring the correct amount of OID to include in your income, see Figuring OID on Long-Term Debt Instruments in Publication 1212. Free file state return only Refiguring periodic interest shown on Form 1099-OID. Free file state return only   If you disposed of a debt instrument or acquired it from another holder during the year, see Bonds Sold Between Interest Dates , earlier, for information about the treatment of periodic interest that may be shown in box 2 of Form 1099-OID for that instrument. Free file state return only Certificates of deposit (CDs). Free file state return only   If you buy a CD with a maturity of more than 1 year, you must include in income each year a part of the total interest due and report it in the same manner as other OID. Free file state return only   This also applies to similar deposit arrangements with banks, building and loan associations, etc. Free file state return only , including: Time deposits, Bonus plans, Savings certificates, Deferred income certificates, Bonus savings certificates, and Growth savings certificates. Free file state return only Bearer CDs. Free file state return only   CDs issued after 1982 generally must be in registered form. Free file state return only Bearer CDs are CDs not in registered form. Free file state return only They are not issued in the depositor's name and are transferable from one individual to another. Free file state return only   Banks must provide the IRS and the person redeeming a bearer CD with a Form 1099-INT. Free file state return only More information. Free file state return only   See chapter 1 of Publication 550 for more information about OID and related topics, such as market discount bonds. Free file state return only When To Report Interest Income When to report your interest income depends on whether you use the cash method or an accrual method to report income. Free file state return only Cash method. Free file state return only   Most individual taxpayers use the cash method. Free file state return only If you use this method, you generally report your interest income in the year in which you actually or constructively receive it. Free file state return only However, there are special rules for reporting the discount on certain debt instruments. Free file state return only See U. Free file state return only S. Free file state return only Savings Bonds and Original Issue Discount (OID) , earlier. Free file state return only Example. Free file state return only On September 1, 2011, you loaned another individual $2,000 at 12%, compounded annually. Free file state return only You are not in the business of lending money. Free file state return only The note stated that principal and interest would be due on August 31, 2013. Free file state return only In 2013, you received $2,508. Free file state return only 80 ($2,000 principal and $508. Free file state return only 80 interest). Free file state return only If you use the cash method, you must include in income on your 2013 return the $508. Free file state return only 80 interest you received in that year. Free file state return only Constructive receipt. Free file state return only   You constructively receive income when it is credited to your account or made available to you. Free file state return only You do not need to have physical possession of it. Free file state return only For example, you are considered to receive interest, dividends, or other earnings on any deposit or account in a bank, savings and loan, or similar financial institution, or interest on life insurance policy dividends left to accumulate, when they are credited to your account and subject to your withdrawal. Free file state return only This is true even if they are not yet entered in your passbook. Free file state return only   You constructively receive income on the deposit or account even if you must: Make withdrawals in multiples of even amounts, Give a notice to withdraw before making the withdrawal, Withdraw all or part of the account to withdraw the earnings, or Pay a penalty on early withdrawals, unless the interest you are to receive on an early withdrawal or redemption is substantially less than the interest payable at maturity. Free file state return only Accrual method. Free file state return only   If you use an accrual method, you report your interest income when you earn it, whether or not you have received it. Free file state return only Interest is earned over the term of the debt instrument. Free file state return only Example. Free file state return only If, in the previous example, you use an accrual method, you must include the interest in your income as you earn it. Free file state return only You would report the interest as follows: 2011, $80; 2012, $249. Free file state return only 60; and 2013, $179. Free file state return only 20. Free file state return only Coupon bonds. Free file state return only   Interest on coupon bonds is taxable in the year the coupon becomes due and payable. Free file state return only It does not matter when you mail the coupon for payment. Free file state return only How To Report Interest Income Generally, you report all your taxable interest income on Form 1040, line 8a; Form 1040A, line 8a; or Form 1040EZ, line 2. Free file state return only You cannot use Form 1040EZ if your taxable interest income is more than $1,500. Free file state return only Instead, you must use Form 1040A or Form 1040. Free file state return only Form 1040A. Free file state return only   You must complete Schedule B (Form 1040A or 1040), Part I, if you file Form 1040A and any of the following are true. Free file state return only Your taxable interest income is more than $1,500. Free file state return only You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier). Free file state return only You received interest from a seller-financed mortgage, and the buyer used the property as a home. Free file state return only You received a Form 1099-INT for U. Free file state return only S. Free file state return only savings bond interest that includes amounts you reported before 2013. Free file state return only You received, as a nominee, interest that actually belongs to someone else. Free file state return only You received a Form 1099-INT for interest on frozen deposits. Free file state return only You are reporting OID in an amount less than the amount shown on Form 1099-OID. Free file state return only You received a Form 1099-INT for interest on a bond you bought between interest payment dates. Free file state return only You acquired taxable bonds after 1987 and choose to reduce interest income from the bonds by any amortizable bond premium (see Bond Premium Amortization in chapter 3 of Publication 550). Free file state return only List each payer's name and the amount of interest income received from each payer on line 1. Free file state return only If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer. Free file state return only   You cannot use Form 1040A if you must use Form 1040, as described next. Free file state return only Form 1040. Free file state return only   You must use Form 1040 instead of Form 1040A or Form 1040EZ if: You forfeited interest income because of the early withdrawal of a time deposit; You acquired taxable bonds after 1987, you choose to reduce interest income from the bonds by any amortizable bond premium, and you are deducting the excess of bond premium amortization for the accrual period over the qualified stated interest for the period (see Bond Premium Amortization in chapter 3 of Publication 550); or You received tax-exempt interest from private activity bonds issued after August 7, 1986. Free file state return only Schedule B (Form 1040A or 1040). Free file state return only   You must complete Schedule B (Form 1040A or 1040), Part I, if you file Form 1040 and any of the following apply. Free file state return only Your taxable interest income is more than $1,500. Free file state return only You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier). Free file state return only You received interest from a seller-financed mortgage, and the buyer used the property as a home. Free file state return only You received a Form 1099-INT for U. Free file state return only S. Free file state return only savings bond interest that includes amounts you reported before 2013. Free file state return only You received, as a nominee, interest that actually belongs to someone else. Free file state return only You received a Form 1099-INT for interest on frozen deposits. Free file state return only You received a Form 1099-INT for interest on a bond you bought between interest payment dates. Free file state return only You are reporting OID in an amount less than the amount shown on Form 1099-OID. Free file state return only Statement (2) in the preceding list under Form 1040 is true. Free file state return only In Part I, line 1, list each payer's name and the amount received from each. Free file state return only If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer. Free file state return only Reporting tax-exempt interest. Free file state return only   Total your tax-exempt interest (such as interest or accrued OID on certain state and municipal bonds, including tax-exempt interest on zero coupon municipal bonds) and exempt-interest dividends from a mutual fund as shown on Form 1099-INT, box 8, and on Form 1099-DIV, box 10. Free file state return only Add these amounts to any other tax-exempt interest you received. Free file state return only Report the total on line 8b of Form 1040A or 1040. Free file state return only   If you file Form 1040EZ, enter “TEI” and the amount in the space to the left of line 2. Free file state return only Do not add tax-exempt interest in the total on Form 1040EZ, line 2. Free file state return only   Form 1099-INT, box 9, and Form 1099-DIV, box 11, show the tax-exempt interest subject to the alternative minimum tax on Form 6251. Free file state return only These amounts are already included in the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 10. Free file state return only Do not add the amounts in Form 1099-INT, box 9 and Form 1099-DIV, box 11 to, or subtract them from, the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 10. Free file state return only    Do not report interest from an individual retirement account (IRA) as tax-exempt interest. Free file state return only Form 1099-INT. Free file state return only   Your taxable interest income, except for interest from U. Free file state return only S. Free file state return only savings bonds and Treasury obligations, is shown in box 1 of Form 1099-INT. Free file state return only Add this amount to any other taxable interest income you received. Free file state return only You must report all of your taxable interest income even if you do not receive a Form 1099-INT. Free file state return only Generally, contact your financial institution if you do not receive a Form 1099-INT by February 15. Free file state return only Your identifying number may be truncated on any paper Form 1099-INT you receive. Free file state return only   If you forfeited interest income because of the early withdrawal of a time deposit, the deductible amount will be shown on Form 1099-INT in box 2. Free file state return only See Penalty on early withdrawal of savings in chapter 1 of Publication 550. Free file state return only   Box 3 of Form 1099-INT shows the interest income you received from U. Free file state return only S. Free file state return only savings bonds, Treasury bills, Treasury notes, and Treasury bonds. Free file state return only Add the amount shown in box 3 to any other taxable interest income you received, unless part of the amount in box 3 was previously included in your interest income. Free file state return only If part of the amount shown in box 3 was previously included in your interest income, see U. Free file state return only S. Free file state return only savings bond interest previously reported , later. Free file state return only   Box 4 of Form 1099-INT will contain an amount if you were subject to backup withholding. Free file state return only Report the amount from box 4 on Form 1040EZ, line 7; on Form 1040A, line 36; or Form 1040, line 62 (federal income tax withheld). Free file state return only   Box 5 of Form 1099-INT shows investment expenses you may be able to deduct as an itemized deduction. Free file state return only See chapter 28 for more information about investment expenses. Free file state return only   If there are entries in boxes 6 and 7 of Form 1099-INT, you must file Form 1040. Free file state return only You may be able to take a credit for the amount shown in box 6 unless you deduct this amount on line 8 of Schedule A (Form 1040). Free file state return only To take the credit, you may have to file Form 1116, Foreign Tax Credit. Free file state return only For more information, see Publication 514, Foreign Tax Credit for Individuals. Free file state return only U. Free file state return only S. Free file state return only savings bond interest previously reported. Free file state return only   If you received a Form 1099-INT for U. Free file state return only S. Free file state return only savings bond interest, the form may show interest you do not have to report. Free file state return only See Form 1099-INT for U. Free file state return only S. Free file state return only savings bonds interest , earlier, under U. Free file state return only S. Free file state return only Savings Bonds. Free file state return only   On Schedule B (Form 1040A or 1040), Part I, line 1, report all the interest shown on your Form 1099-INT. Free file state return only Then follow these steps. Free file state return only Several lines above line 2, enter a subtotal of all interest listed on line 1. Free file state return only Below the subtotal enter “U. Free file state return only S. Free file state return only Savings Bond Interest Previously Reported” and enter amounts previously reported or interest accrued before you received the bond. Free file state return only Subtract these amounts from the subtotal and enter the result on line 2. Free file state return only More information. Free file state return only   For more information about how to report interest income, see chapter 1 of Publication 550 or the instructions for the form you must file. Free file state return only Prev  Up  Next   Home   More Online Publications