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Free Online Tax Extension

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Free Online Tax Extension

Free online tax extension 4. Free online tax extension   General Business Credits Table of Contents Introduction Useful Items - You may want to see: Business Credits How To Claim the Credit Introduction Your general business credit for the year consists of your carryforward of business credits from prior years plus the total of your current year business credits. Free online tax extension In addition, your general business credit for the current year may be increased later by the carryback of business credits from later years. Free online tax extension You subtract this credit directly from your tax. Free online tax extension Useful Items - You may want to see: Form (and Instructions) 3800 General Business Credit 6251 Alternative Minimum Tax—Individuals See chapter 12 for information about getting publications and forms. Free online tax extension Business Credits All of the following credits are part of the general business credit. Free online tax extension The form you use to figure each credit is shown in parentheses. Free online tax extension You will also have to complete Form 3800. Free online tax extension Alternative fuel vehicle refueling property credit (Form 8911). Free online tax extension   This credit applies to the cost of any qualified fuel vehicle refueling property you placed in service. Free online tax extension For more information, see Form 8911. Free online tax extension Alternative motor vehicle credit (Form 8910). Free online tax extension   For more information, see Form 8910. Free online tax extension Biodiesel and renewable diesel fuels credit (Form 8864). Free online tax extension   For more information, see Form 8864. Free online tax extension Biofuel producer credit (Form 6478). Free online tax extension    For more information, see Form 6478. Free online tax extension Carbon dioxide sequestration credit (Form 8933). Free online tax extension   This credit is for carbon dioxide which is captured at a qualified facility and disposed of in a secure geological storage or used in a qualified enhanced oil or natural gas recovery project. Free online tax extension For more information, see Form 8933. Free online tax extension Credit for employer social security and Medicare taxes paid on certain employee tips (Form 8846). Free online tax extension   This credit is generally equal to your (employer's) portion of social security and Medicare taxes paid on tips received by employees of your food and beverage establishment where tipping is customary. Free online tax extension The credit applies regardless of whether the food is consumed on or off your business premises. Free online tax extension For more information, see Form 8846. Free online tax extension Credit for employer differential wage payments (Form 8932). Free online tax extension   This credit provides certain small businesses with an incentive to continue to pay wages to an employee performing services on active duty in the uniformed services of the United States for a period of more than 30 days. Free online tax extension For more information, see Form 8932. Free online tax extension Credit for employer-provided childcare facilities and services (Form 8882). Free online tax extension   This credit applies to the qualified expenses you paid for employee childcare and qualified expenses you paid for childcare resource and referral services. Free online tax extension For more information, see Form 8882. Free online tax extension Credit for increasing research activities (Form 6765). Free online tax extension   This credit is designed to encourage businesses to increase the amounts they spend on research and experimental activities, including energy research. Free online tax extension For more information, see Form 6765. Free online tax extension Credit for small employer health insurance premiums (Form 8941). Free online tax extension   This credit applies to the cost of certain health insurance coverage you provide to certain employees. Free online tax extension For more information, see Form 8941. Free online tax extension Credit for small employer pension plan startup costs (Form 8881). Free online tax extension   This credit applies to pension plan startup costs of a new qualified defined benefit or defined contribution plan (including a 401(k) plan), SIMPLE plan, or simplified employee pension. Free online tax extension For more information, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). Free online tax extension Disabled access credit (Form 8826). Free online tax extension   This credit is a nonrefundable tax credit for an eligible small business that pays or incurs expenses to provide access to persons who have disabilities. Free online tax extension You must pay or incur the expenses to enable your business to comply with the Americans with Disabilities Act of 1990. Free online tax extension For more information, see Form 8826. Free online tax extension Distilled spirits credit (Form 8906). Free online tax extension   This credit is available to distillers and importers of distilled spirits and eligible wholesalers of distilled spirits. Free online tax extension For more information, see Form 8906. Free online tax extension Empowerment zone employment credit (Form 8844). Free online tax extension   You may qualify for this credit if you have employees and are engaged in a business in an empowerment zone for which the credit is available. Free online tax extension For more information, see Form 8844. Free online tax extension Energy efficient appliance credit (Form 8909). Free online tax extension   This credit is available for manufacturers of eligible appliances. Free online tax extension For more information, see Form 8909. Free online tax extension Energy efficient home credit (Form 8908). Free online tax extension   This credit is available for eligible contractors of certain homes sold for use as a residence. Free online tax extension For more information, see Form 8908. Free online tax extension Indian employment credit (Form 8845). Free online tax extension   This credit applies to qualified wages and health insurance costs you paid or incurred for qualified employees. Free online tax extension For more information, see Form 8845. Free online tax extension Investment credit (Form 3468). Free online tax extension   The investment credit is the total of the following credits. Free online tax extension Rehabilitation credit. Free online tax extension Energy credit. Free online tax extension Qualifying advanced coal project credit. Free online tax extension Qualifying gasification project credit. Free online tax extension Qualifying advanced energy project credit. Free online tax extension   For more information, see Form 3468. Free online tax extension Low sulfur diesel fuel production credit (Form 8896). Free online tax extension    For more information, see Form 8896. Free online tax extension Low-income housing credit (Form 8586). Free online tax extension   This credit generally applies to each new qualified low-income building placed in service after 1986. Free online tax extension For more information, see Form 8586. Free online tax extension Mine rescue team training credit (Form 8923). Free online tax extension   This credit applies to training program costs you pay or incur for certain mine rescue team employees. Free online tax extension For more information, see Form 8923. Free online tax extension New markets credit (Form 8874). Free online tax extension   This credit is for qualified equity investments made in qualified community development entities. Free online tax extension For more information, see Form 8874. Free online tax extension Nonconventional source fuel credit (Form 8907). Free online tax extension   This credit is for qualified coke and coke gas you produced and sold to an unrelated person during the tax year. Free online tax extension For more information, see Form 8907. Free online tax extension Orphan drug credit (Form 8820). Free online tax extension   This credit applies to qualified expenses incurred in testing certain drugs for rare diseases and conditions. Free online tax extension For more information, see Form 8820. Free online tax extension Qualified plug-in electric drive motor vehicle credit (Form 8936). Free online tax extension   This credit is for certain new qualified plug-in electric vehicles placed in service during the tax year. Free online tax extension For more information, see Form 8936. Free online tax extension Qualified railroad track maintenance credit (Form 8900). Free online tax extension   This credit applies with respect to qualified railroad track maintenance expenditures paid or incurred during the tax year. Free online tax extension For more information, see Form 8900. Free online tax extension Renewable electricity, refined coal, and Indian coal production credit (Form 8835). Free online tax extension   This credit is for the sale of electricity, refined coal, or Indian coal produced in the United States or U. Free online tax extension S. Free online tax extension possessions from qualified energy resources at a qualified facility. Free online tax extension For more information, see Form 8835. Free online tax extension Work opportunity credit (Form 5884). Free online tax extension   This credit provides businesses with an incentive to hire individuals from targeted groups that have a particularly high unemployment rate or other special employment needs. Free online tax extension For more information, see Form 5884. Free online tax extension How To Claim the Credit To claim a general business credit, you will first have to get the forms you need to claim your current year business credits. Free online tax extension In addition to the credit form, you also need to file Form 3800. Free online tax extension Prev  Up  Next   Home   More Online Publications
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EFTPS: The Electronic Federal Tax Payment System

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The Easiest Way to Pay All Your Federal Taxes

EFTPS® is a system for paying federal taxes electronically using the Internet, or by phone using the EFTPS® Voice Response System. EFTPS® is offered free by the U.S. Department of Treasury. Over 12 million taxpayers are currently enrolled in the system. Since EFTPS® began in 1996, there have been over 1.45 billion electronic payments made, totaling over $29.5 trillion!
 


EFTPS® offers ...

  • Security
  • Convenience
  • Accuracy

Security You Can Count On

EFTPS® is a secure government web site that allows users to make federal tax payments electronically. Every user must have a secure Internet browser with 128-bit encryption in order to access the site. To log on to the system, an enrolled user must be authenticated with three pieces of unique information: Taxpayer Identification Number (EIN or SSN), EFTPS® Personal Identification Number (PIN) and an Internet Password. The combination of these three pieces of identification adds to the security of the site and the privacy of taxpayer data.

Convenience at Your Fingertips

  • EFTPS® offers you the convenience and flexibility of making your tax payments via the Internet or phone. You can initiate your tax payment from your home or office, 24/7.

  • Businesses and Individuals can schedule payments up to 365 days in advance. Scheduled payments can be changed or cancelled up to two business days in advance of the scheduled payment date.

  • You can use EFTPS® to make all your federal tax payments, including income, employment, estimated and excise taxes.

  • You can check up to 16 months of your EFTPS® payment history online or by calling EFTPS® Customer Service.

Accuracy You Can Depend On

By 8 p.m. ET at least one calendar day in advance of the due date, submit your payment instructions to EFTPS® to move the funds from your account to the Treasury's account for payment of your federal taxes. Funds will not move from your account until the date you indicate. You will receive an immediate acknowledgement of your payment instructions, and your bank statement will confirm the payment was made. 

EFTPS® Enrollment

To enroll, or for more information on enrollment, visit EFTPS® or call EFTPS® Customer Service to request an enrollment form:

  • 1-800-555-4477 
  • 1-800-733-4829 (TDD Hearing-Impaired)
  • 1-800-244-4829 (Español)

EFTPS Inquiry PIN

Beginning this year, when Payroll Service Providers enroll clients in EFTPS, an EFTPS Inquiry PIN will automatically be sent to the taxpayer.  Taxpayers who have had activity on their EFTPS account over the prior 12 months will also receive Inquiry PINs.  This Inquiry PIN allows the taxpayer access to monitor the EFTPS for transactions made on their behalf.

And there's more...

Tax professionals, accountants, and payroll companies are discovering the added benefits of using EFTPS®.

  • EFTPS® via the Internet or phone - Once enrolled, individual and business taxpayers can use the Internet to make all their federal tax payments via the Internet, or phone using the EFTPS® Voice Response System. Both payment methods are interchangeable. 

  • EFTPS® Batch Provider - Tax professionals/providers can register through this software and send up to 1,000 enrollments and 5,000 payments in one transaction. Users can synchronize enrollments and payments between the software and EFTPS® database in real-time. To download the EFTPS® Batch Provider Software and User's Manual visit EFTPS® and follow these steps:
  1. Click on HELP & INFORMATION
  2. Click on Downloads
  3. Click on Batch Provider Software User's Manual
  4. Click on Software (left side of screen) for additional information

  • EFTPS® Bulk Provider - Designed for payroll processors who initiate frequent payments from and desire automated enrollment through an Electronic Data Interchange (EDI) compatible system.

Additional Information is available in the articles below:

Publication 966 -  The Secure Way to Pay Your Federal Taxes for Businesses and Individuals

Publication 4990 - Tax Payment Instruction Booklet

Link for ordering free EFTPS® Marketing Materials

Electronic Payment Options Home Page

Current scams and phishing sites posing as the IRS

EFTPS® –  Treasury’s free service for paying federal taxes for individuals and businesses



 

Page Last Reviewed or Updated: 17-Mar-2014

The Free Online Tax Extension

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