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State Income Tax Filing Free

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State Income Tax Filing Free

State income tax filing free 4. State income tax filing free   Special Situations Table of Contents Condominiums CooperativesDepreciation Property Changed to Rental UseBasis of Property Changed to Rental Use Figuring the Depreciation Deduction Renting Part of Property Not Rented for ProfitPostponing decision. State income tax filing free Example—Property Changed to Rental Use This chapter discusses some rental real estate activities that are subject to additional rules. State income tax filing free Condominiums A condominium is most often a dwelling unit in a multi-unit building, but can also take other forms, such as a townhouse or garden apartment. State income tax filing free If you own a condominium, you also own a share of the common elements, such as land, lobbies, elevators, and service areas. State income tax filing free You and the other condominium owners may pay dues or assessments to a special corporation that is organized to take care of the common elements. State income tax filing free Special rules apply if you rent your condominium to others. State income tax filing free You can deduct as rental expenses all the expenses discussed in chapters 1 and 2. State income tax filing free In addition, you can deduct any dues or assessments paid for maintenance of the common elements. State income tax filing free You cannot deduct special assessments you pay to a condominium management corporation for improvements. State income tax filing free However, you may be able to recover your share of the cost of any improvement by taking depreciation. State income tax filing free Cooperatives If you live in a cooperative, you do not own your apartment. State income tax filing free Instead, a corporation owns the apartments and you are a tenant-stockholder in the cooperative housing corporation. State income tax filing free If you rent your apartment to others, you usually can deduct, as a rental expense, all the maintenance fees you pay to the cooperative housing corporation. State income tax filing free In addition to the maintenance fees paid to the cooperative housing corporation, you can deduct your direct payments for repairs, upkeep, and other rental expenses, including interest paid on a loan used to buy your stock in the corporation. State income tax filing free Depreciation You will be depreciating your stock in the corporation rather than the apartment itself. State income tax filing free Figure your depreciation deduction as follows. State income tax filing free Figure the depreciation for all the depreciable real property owned by the corporation. State income tax filing free (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. State income tax filing free ) If you bought your cooperative stock after its first offering, figure the depreciable basis of this property as follows. State income tax filing free Multiply your cost per share by the total number of outstanding shares. State income tax filing free Add to the amount figured in (a) any mortgage debt on the property on the date you bought the stock. State income tax filing free Subtract from the amount figured in (b) any mortgage debt that is not for the depreciable real property, such as the part for the land. State income tax filing free Subtract from the amount figured in (1) any depreciation for space owned by the corporation that can be rented but cannot be lived in by tenant-stockholders. State income tax filing free Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. State income tax filing free Multiply the result of (2) by the percentage you figured in (3). State income tax filing free This is your depreciation on the stock. State income tax filing free Your depreciation deduction for the year cannot be more than the part of your adjusted basis (defined in chapter 2) in the stock of the corporation that is allocable to your rental property. State income tax filing free Payments added to capital account. State income tax filing free   Payments earmarked for a capital asset or improvement, or otherwise charged to the corporation's capital account are added to the basis of your stock in the corporation. State income tax filing free For example, you cannot deduct a payment used to pave a community parking lot, install a new roof, or pay the principal of the corporation's mortgage. State income tax filing free   Treat as a capital cost the amount you were assessed for capital items. State income tax filing free This cannot be more than the amount by which your payments to the corporation exceeded your share of the corporation's mortgage interest and real estate taxes. State income tax filing free   Your share of interest and taxes is the amount the corporation elected to allocate to you, if it reasonably reflects those expenses for your apartment. State income tax filing free Otherwise, figure your share in the following manner. State income tax filing free Divide the number of your shares of stock by the total number of shares outstanding, including any shares held by the corporation. State income tax filing free Multiply the corporation's deductible interest by the number you figured in (1). State income tax filing free This is your share of the interest. State income tax filing free Multiply the corporation's deductible taxes by the number you figured in (1). State income tax filing free This is your share of the taxes. State income tax filing free Property Changed to Rental Use If you change your home or other property (or a part of it) to rental use at any time other than the beginning of your tax year, you must divide yearly expenses, such as taxes and insurance, between rental use and personal use. State income tax filing free You can deduct as rental expenses only the part of the expense that is for the part of the year the property was used or held for rental purposes. State income tax filing free You cannot deduct depreciation or insurance for the part of the year the property was held for personal use. State income tax filing free However, you can include the home mortgage interest, qualified mortgage insurance premiums, and real estate tax expenses for the part of the year the property was held for personal use as an itemized deduction on Schedule A (Form 1040). State income tax filing free Example. State income tax filing free Your tax year is the calendar year. State income tax filing free You moved from your home in May and started renting it out on June 1. State income tax filing free You can deduct as rental expenses seven-twelfths of your yearly expenses, such as taxes and insurance. State income tax filing free Starting with June, you can deduct as rental expenses the amounts you pay for items generally billed monthly, such as utilities. State income tax filing free When figuring depreciation, treat the property as placed in service on June 1. State income tax filing free Basis of Property Changed to Rental Use When you change property you held for personal use to rental use (for example, you rent your former home), the basis for depreciation will be the lesser of fair market value or adjusted basis on the date of conversion. State income tax filing free Fair market value. State income tax filing free   This is the price at which the property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts. State income tax filing free Sales of similar property, on or about the same date, may be helpful in figuring the fair market value of the property. State income tax filing free Figuring the basis. State income tax filing free   The basis for depreciation is the lesser of: The fair market value of the property on the date you changed it to rental use, or Your adjusted basis on the date of the change—that is, your original cost or other basis of the property, plus the cost of permanent additions or improvements since you acquired it, minus deductions for any casualty or theft losses claimed on earlier years' income tax returns and other decreases to basis. State income tax filing free For other increases and decreases to basis, see Adjusted Basis in chapter 2. State income tax filing free Example. State income tax filing free Several years ago you built your home for $140,000 on a lot that cost you $14,000. State income tax filing free Before changing the property to rental use this year, you added $28,000 of permanent improvements to the house and claimed a $3,500 casualty loss deduction for damage to the house. State income tax filing free Part of the improvements qualified for a $500 residential energy credit, which you claimed on your 2010 tax return. State income tax filing free Because land is not depreciable, you can only include the cost of the house when figuring the basis for depreciation. State income tax filing free The adjusted basis of the house at the time of the change in its use was $164,000 ($140,000 + $28,000 − $3,500 − $500). State income tax filing free On the date of the change in use, your property had a fair market value of $168,000, of which $21,000 was for the land and $147,000 was for the house. State income tax filing free The basis for depreciation on the house is the fair market value on the date of the change ($147,000), because it is less than your adjusted basis ($164,000). State income tax filing free Cooperatives If you change your cooperative apartment to rental use, figure your allowable depreciation as explained earlier. State income tax filing free (Depreciation methods are discussed in chapter 2 of this publication and Publication 946. State income tax filing free ) The basis of all the depreciable real property owned by the cooperative housing corporation is the smaller of the following amounts. State income tax filing free The fair market value of the property on the date you change your apartment to rental use. State income tax filing free This is considered to be the same as the corporation's adjusted basis minus straight line depreciation, unless this value is unrealistic. State income tax filing free The corporation's adjusted basis in the property on that date. State income tax filing free Do not subtract depreciation when figuring the corporation's adjusted basis. State income tax filing free If you bought the stock after its first offering, the corporation's adjusted basis in the property is the amount figured in (1) under Depreciation (under Cooperatives, near the beginning of this chapter). State income tax filing free The fair market value of the property is considered to be the same as the corporation's adjusted basis figured in this way minus straight line depreciation, unless the value is unrealistic. State income tax filing free Figuring the Depreciation Deduction To figure the deduction, use the depreciation system in effect when you convert your residence to rental use. State income tax filing free Generally, that will be MACRS for any conversion after 1986. State income tax filing free Treat the property as placed in service on the conversion date. State income tax filing free Example. State income tax filing free Your converted residence (see previous example under Figuring the basis) was available for rent on August 1. State income tax filing free Using Table 2-2d (see chapter 2), the percentage for Year 1 beginning in August is 1. State income tax filing free 364% and the depreciation deduction for Year 1 is $2,005 ($147,000 × . State income tax filing free 01364). State income tax filing free Renting Part of Property If you rent part of your property, you must divide certain expenses between the part of the property used for rental purposes and the part of the property used for personal purposes, as though you actually had two separate pieces of property. State income tax filing free You can deduct the expenses related to the part of the property used for rental purposes, such as home mortgage interest, qualified mortgage insurance premiums, and real estate taxes, as rental expenses on Schedule E (Form 1040). State income tax filing free You can also deduct as rental expenses a portion of other expenses that normally are nondeductible personal expenses, such as expenses for electricity, or painting the outside of the house. State income tax filing free There is no change in the types of expenses deductible for the personal-use part of your property. State income tax filing free Generally, these expenses may be deducted only if you itemize your deductions on Schedule A (Form 1040). State income tax filing free You cannot deduct any part of the cost of the first phone line even if your tenants have unlimited use of it. State income tax filing free You do not have to divide the expenses that belong only to the rental part of your property. State income tax filing free For example, if you paint a room that you rent, or if you pay premiums for liability insurance in connection with renting a room in your home, your entire cost is a rental expense. State income tax filing free If you install a second phone line strictly for your tenant's use, all of the cost of the second line is deductible as a rental expense. State income tax filing free You can deduct depreciation on the part of the house used for rental purposes as well as on the furniture and equipment you use for rental purposes. State income tax filing free How to divide expenses. State income tax filing free   If an expense is for both rental use and personal use, such as mortgage interest or heat for the entire house, you must divide the expense between rental use and personal use. State income tax filing free You can use any reasonable method for dividing the expense. State income tax filing free It may be reasonable to divide the cost of some items (for example, water) based on the number of people using them. State income tax filing free The two most common methods for dividing an expense are (1) the number of rooms in your home, and (2) the square footage of your home. State income tax filing free Example. State income tax filing free You rent a room in your house. State income tax filing free The room is 12 × 15 feet, or 180 square feet. State income tax filing free Your entire house has 1,800 square feet of floor space. State income tax filing free You can deduct as a rental expense 10% of any expense that must be divided between rental use and personal use. State income tax filing free If your heating bill for the year for the entire house was $600, $60 ($600 × . State income tax filing free 10) is a rental expense. State income tax filing free The balance, $540, is a personal expense that you cannot deduct. State income tax filing free Duplex. State income tax filing free   A common situation is the duplex where you live in one unit and rent out the other. State income tax filing free Certain expenses apply to the entire property, such as mortgage interest and real estate taxes, and must be split to determine rental and personal expenses. State income tax filing free Example. State income tax filing free You own a duplex and live in one half, renting the other half. State income tax filing free Both units are approximately the same size. State income tax filing free Last year, you paid a total of $10,000 mortgage interest and $2,000 real estate taxes for the entire property. State income tax filing free You can deduct $5,000 mortgage interest and $1,000 real estate taxes on Schedule E (Form 1040), and if you itemize your deductions, you can deduct the other $5,000 mortgage interest and $1,000 real estate taxes on Schedule A (Form 1040). State income tax filing free Not Rented for Profit If you do not rent your property to make a profit, you can deduct your rental expenses only up to the amount of your rental income. State income tax filing free You cannot deduct a loss or carry forward to the next year any rental expenses that are more than your rental income for the year. State income tax filing free Where to report. State income tax filing free   Report your not-for-profit rental income on Form 1040 or 1040NR, line 21. State income tax filing free For example, if you are filing Form 1040, you can include your mortgage interest and any qualified mortgage insurance premiums (if you use the property as your main home or second home), real estate taxes, and casualty losses on the appropriate lines of Schedule A (Form 1040) if you itemize your deductions. State income tax filing free   If you itemize your deductions, claim your other rental expenses, subject to the rules explained in chapter 1 of Publication 535, as miscellaneous itemized deductions on Schedule A (Form 1040), line 23, or Schedule A (Form 1040NR), line 9. State income tax filing free You can deduct these expenses only if they, together with certain other miscellaneous itemized deductions, total more than 2% of your adjusted gross income. State income tax filing free Presumption of profit. State income tax filing free   If your rental income is more than your rental expenses for at least 3 years out of a period of 5 consecutive years, you are presumed to be renting your property to make a profit. State income tax filing free Postponing decision. State income tax filing free   If you are starting your rental activity and do not have 3 years showing a profit, you can elect to have the presumption made after you have the 5 years of experience required by the test. State income tax filing free You may choose to postpone the decision of whether the rental is for profit by filing Form 5213. State income tax filing free You must file Form 5213 within 3 years after the due date of your return (determined without extensions) for the year in which you first carried on the activity or, if earlier, within 60 days after receiving written notice from the Internal Revenue Service proposing to disallow deductions attributable to the activity. State income tax filing free More information. State income tax filing free   For more information about the rules for an activity not engaged in for profit, see Not-for-Profit Activities in chapter 1 of Publication 535. State income tax filing free Example—Property Changed to Rental Use In January, Eileen Johnson bought a condominium apartment to live in. State income tax filing free Instead of selling the house she had been living in, she decided to change it to rental property. State income tax filing free Eileen selected a tenant and started renting the house on February 1. State income tax filing free Eileen charges $750 a month for rent and collects it herself. State income tax filing free Eileen also received a $750 security deposit from her tenant. State income tax filing free Because she plans to return it to her tenant at the end of the lease, she does not include it in her income. State income tax filing free Her rental expenses for the year are as follows. State income tax filing free   Mortgage interest $1,800     Fire insurance (1-year policy) 100     Miscellaneous repairs (after renting) 297     Real estate taxes imposed and paid 1,200   Eileen must divide the real estate taxes, mortgage interest, and fire insurance between the personal use of the property and the rental use of the property. State income tax filing free She can deduct eleven-twelfths of these expenses as rental expenses. State income tax filing free She can include the balance of the allowable taxes and mortgage interest on Schedule A (Form 1040) if she itemizes. State income tax filing free She cannot deduct the balance of the fire insurance because it is a personal expense. State income tax filing free Eileen bought this house in 1984 for $35,000. State income tax filing free Her property tax was based on assessed values of $10,000 for the land and $25,000 for the house. State income tax filing free Before changing it to rental property, Eileen added several improvements to the house. State income tax filing free She figures her adjusted basis as follows:   Improvements Cost     House $25,000     Remodeled kitchen 4,200     Recreation room 5,800     New roof 1,600     Patio and deck 2,400     Adjusted basis $39,000   On February 1, when Eileen changed her house to rental property, the property had a fair market value of $152,000. State income tax filing free Of this amount, $35,000 was for the land and $117,000 was for the house. State income tax filing free Because Eileen's adjusted basis is less than the fair market value on the date of the change, Eileen uses $39,000 as her basis for depreciation. State income tax filing free As specified for residential rental property, Eileen must use the straight line method of depreciation over the GDS or ADS recovery period. State income tax filing free She chooses the GDS recovery period of 27. State income tax filing free 5 years. State income tax filing free She uses Table 2-2d to find her depreciation percentage. State income tax filing free Since she placed the property in service in February, the percentage is 3. State income tax filing free 182%. State income tax filing free On April 1, Eileen bought a new dishwasher for the rental property at a cost of $425. State income tax filing free The dishwasher is personal property used in a rental real estate activity, which has a 5-year recovery period. State income tax filing free She uses Table 2-2a to find the percentage for Year 1 under “Half-year convention” (20%) to figure her depreciation deduction. State income tax filing free On May 1, Eileen paid $4,000 to have a furnace installed in the house. State income tax filing free The furnace is residential rental property. State income tax filing free Because she placed the property in service in May, the percentage from Table 2-2d is 2. State income tax filing free 273%. State income tax filing free Eileen figures her net rental income or loss for the house as follows: Total rental income received  ($750 × 11) $8,250 Minus: Expenses     Mortgage interest ($1,800 × 11/12) $1,650   Fire insurance ($100 × 11/12) 92   Miscellaneous repairs 297   Real estate taxes ($1,200 × 11/12) 1,100   Total expenses 3,139 Balance $5,111 Minus: Depreciation     House ($39,000 × . State income tax filing free 03182) $1,241   Dishwasher ($425 × . State income tax filing free 20) 85   Furnace ($4,000 × . State income tax filing free 02273) 91   Total depreciation 1,417 Net rental income for house   $3,694       Eileen uses Schedule E, Part I, to report her rental income and expenses. State income tax filing free She enters her income, expenses, and depreciation for the house in the column for Property A. State income tax filing free Since all property was placed in service this year, Eileen must use Form 4562 to figure the depreciation. State income tax filing free See the Instructions for Form 4562 for more information on preparing the form. State income tax filing free Prev  Up  Next   Home   More Online Publications
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State income tax filing free 7. State income tax filing free   Interest Income Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationSSN for joint account. State income tax filing free Custodian account for your child. State income tax filing free Penalty for failure to supply SSN. State income tax filing free Reporting backup withholding. State income tax filing free Savings account with parent as trustee. State income tax filing free Interest not reported on Form 1099-INT. State income tax filing free Nominees. State income tax filing free Incorrect amount. State income tax filing free Information reporting requirement. State income tax filing free Taxable InterestInterest subject to penalty for early withdrawal. State income tax filing free Money borrowed to invest in certificate of deposit. State income tax filing free U. State income tax filing free S. State income tax filing free Savings Bonds Education Savings Bond Program U. State income tax filing free S. State income tax filing free 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. State income tax filing free How To Report Interest IncomeSchedule B (Form 1040A or 1040). State income tax filing free Reporting tax-exempt interest. State income tax filing free U. State income tax filing free S. State income tax filing free savings bond interest previously reported. State income tax filing free Reminder Foreign-source income. State income tax filing free  If you are a U. State income tax filing free S. State income tax filing free 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. State income tax filing free S. State income tax filing free law. State income tax filing free 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. State income tax filing free Introduction This chapter discusses the following topics. State income tax filing free Different types of interest income. State income tax filing free What interest is taxable and what interest is nontaxable. State income tax filing free When to report interest income. State income tax filing free How to report interest income on your tax return. State income tax filing free In general, any interest you receive or that is credited to your account and can be withdrawn is taxable income. State income tax filing free Exceptions to this rule are discussed later in this chapter. State income tax filing free You may be able to deduct expenses you have in earning this income on Schedule A (Form 1040) if you itemize your deductions. State income tax filing free See Money borrowed to invest in certificate of deposit , later, and chapter 28. State income tax filing free 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. State income tax filing free S. State income tax filing free Savings Bonds Issued After 1989 8818 Optional Form To Record Redemption of Series EE and I U. State income tax filing free S. State income tax filing free Savings Bonds Issued After 1989 General Information A few items of general interest are covered here. State income tax filing free Recordkeeping. State income tax filing free You should keep a list showing sources and interest amounts received during the year. State income tax filing free Also, keep the forms you receive showing your interest income (Forms 1099-INT, for example) as an important part of your records. State income tax filing free Tax on unearned income of certain children. State income tax filing free    Part of a child's 2013 unearned income may be taxed at the parent's tax rate. State income tax filing free If so, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. State income tax filing free If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. State income tax filing free   Some parents can choose to include the child's interest and dividends on the parent's return. State income tax filing free If you can, use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. State income tax filing free   For more information about the tax on unearned income of children and the parents' election, see chapter 31. State income tax filing free Beneficiary of an estate or trust. State income tax filing free   Interest you receive as a beneficiary of an estate or trust is generally taxable income. State income tax filing free You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. State income tax filing free , from the fiduciary. State income tax filing free Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. State income tax filing free Social security number (SSN). State income tax filing free   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. State income tax filing free This includes payers of interest. State income tax filing free If you do not give your SSN or ITIN to the payer of interest, you may have to pay a penalty. State income tax filing free SSN for joint account. State income tax filing free   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. State income tax filing free (For information on who owns the funds in a joint account, see Joint accounts , later. State income tax filing free ) If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account. State income tax filing free This is because only one name and SSN can be shown on Form 1099. State income tax filing free   These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. State income tax filing free 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. State income tax filing free Custodian account for your child. State income tax filing free   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. State income tax filing free 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. State income tax filing free Penalty for failure to supply SSN. State income tax filing free   If you do not give your SSN to the payer of interest, you may have to pay a penalty. State income tax filing free See Failure to supply SSN under Penalties in chapter 1. State income tax filing free Backup withholding also may apply. State income tax filing free Backup withholding. State income tax filing free   Your interest income is generally not subject to regular withholding. State income tax filing free However, it may be subject to backup withholding to ensure that income tax is collected on the income. State income tax filing free Under backup withholding, the payer of interest must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. State income tax filing free   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. State income tax filing free For more information, see Backup Withholding in chapter 4. State income tax filing free Reporting backup withholding. State income tax filing free   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. State income tax filing free The Form 1099-INT will show any backup withholding as “Federal income tax withheld. State income tax filing free ” Joint accounts. State income tax filing free   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. State income tax filing free Income from property given to a child. State income tax filing free   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. State income tax filing free   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. State income tax filing free Savings account with parent as trustee. State income tax filing free   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. State income tax filing free The savings account legally belongs to the child. State income tax filing free The parents are not legally permitted to use any of the funds to support the child. State income tax filing free Form 1099-INT. State income tax filing free   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. State income tax filing free This form shows you the interest you received during the year. State income tax filing free Keep this form for your records. State income tax filing free You do not have to attach it to your tax return. State income tax filing free   Report on your tax return the total interest income you receive for the tax year. State income tax filing free Interest not reported on Form 1099-INT. State income tax filing free   Even if you do not receive Form 1099-INT, you must still report all of your interest income. State income tax filing free For example, you may receive distributive shares of interest from partnerships or S corporations. State income tax filing free This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deduction, Credits, etc. State income tax filing free , or Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. State income tax filing free Nominees. State income tax filing free   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. State income tax filing free   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. State income tax filing free Incorrect amount. State income tax filing free   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. State income tax filing free The new Form 1099-INT you receive will be marked “Corrected. State income tax filing free ” Form 1099-OID. State income tax filing free   Reportable interest income also may be shown on Form 1099-OID, Original Issue Discount. State income tax filing free For more information about amounts shown on this form, see Original Issue Discount (OID) , later in this chapter. State income tax filing free Exempt-interest dividends. State income tax filing free   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. State income tax filing free (However, see Information reporting requirement , next. State income tax filing free ) Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. State income tax filing free You do not reduce your basis for distributions that are exempt-interest dividends. State income tax filing free Information reporting requirement. State income tax filing free   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file. State income tax filing free This is an information reporting requirement and does not change the exempt-interest dividends into taxable income. State income tax filing free Note. State income tax filing free Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. State income tax filing free See Alternative Minimum Tax (AMT) in chapter 30 for more information. State income tax filing free Chapter 1 of Publication 550 contains a discussion on private activity bonds under State or Local Government Obligations. State income tax filing free Interest on VA dividends. State income tax filing free   Interest on insurance dividends left on deposit with the Department of Veterans Affairs (VA) is not taxable. State income tax filing free This includes interest paid on dividends on converted United States Government Life Insurance and on National Service Life Insurance policies. State income tax filing free Individual retirement arrangements (IRAs). State income tax filing free   Interest on a Roth IRA generally is not taxable. State income tax filing free Interest on a traditional IRA is tax deferred. State income tax filing free You generally do not include it in your income until you make withdrawals from the IRA. State income tax filing free See chapter 17. State income tax filing free Taxable Interest Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. State income tax filing free The following are some sources of taxable interest. State income tax filing free Dividends that are actually interest. State income tax filing free   Certain distributions commonly called dividends are actually interest. State income tax filing free 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. State income tax filing free  The “dividends” will be shown as interest income on Form 1099-INT. State income tax filing free Money market funds. State income tax filing free   Money market funds pay dividends and are offered by nonbank financial institutions, such as mutual funds and stock brokerage houses. State income tax filing free Generally, amounts you receive from money market funds should be reported as dividends, not as interest. State income tax filing free Certificates of deposit and other deferred interest accounts. State income tax filing free   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. State income tax filing free 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. State income tax filing free The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. State income tax filing free If interest is deferred for more than 1 year, see Original Issue Discount (OID) , later. State income tax filing free Interest subject to penalty for early withdrawal. State income tax filing free   If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. State income tax filing free You must report the total amount of interest paid or credited to your account during the year, without subtracting the penalty. State income tax filing free 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. State income tax filing free Money borrowed to invest in certificate of deposit. State income tax filing free   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. State income tax filing free You must report the total interest you earn on the certificate in your income. State income tax filing free If you itemize deductions, you can deduct the interest you pay as investment interest, up to the amount of your net investment income. State income tax filing free See Interest Expenses in chapter 3 of Publication 550. State income tax filing free Example. State income tax filing free 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. State income tax filing free 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. State income tax filing free The bank gives you a Form 1099-INT for 2013 showing the $575 interest you earned. State income tax filing free The bank also gives you a statement showing that you paid $310 interest for 2013. State income tax filing free You must include the $575 in your income. State income tax filing free If you itemize your deductions on Schedule A (Form 1040), you can deduct $310, subject to the net investment income limit. State income tax filing free Gift for opening account. State income tax filing free   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. State income tax filing free   For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. State income tax filing free For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. State income tax filing free The value is determined by the cost to the financial institution. State income tax filing free Example. State income tax filing free You open a savings account at your local bank and deposit $800. State income tax filing free The account earns $20 interest. State income tax filing free You also receive a $15 calculator. State income tax filing free 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. State income tax filing free You must report $35 interest income on your tax return. State income tax filing free Interest on insurance dividends. State income tax filing free   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. State income tax filing free 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. State income tax filing free Prepaid insurance premiums. State income tax filing free   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. State income tax filing free U. State income tax filing free S. State income tax filing free obligations. State income tax filing free   Interest on U. State income tax filing free S. State income tax filing free obligations, such as U. State income tax filing free S. State income tax filing free Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes. State income tax filing free Interest on tax refunds. State income tax filing free   Interest you receive on tax refunds is taxable income. State income tax filing free Interest on condemnation award. State income tax filing free   If the condemning authority pays you interest to compensate you for a delay in payment of an award, the interest is taxable. State income tax filing free Installment sale payments. State income tax filing free   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. State income tax filing free That interest is taxable when you receive it. State income tax filing free If little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest. State income tax filing free See Unstated Interest and Original Issue Discount in Publication 537, Installment Sales. State income tax filing free Interest on annuity contract. State income tax filing free   Accumulated interest on an annuity contract you sell before its maturity date is taxable. State income tax filing free Usurious interest. State income tax filing free   Usurious interest is interest charged at an illegal rate. State income tax filing free This is taxable as interest unless state law automatically changes it to a payment on the principal. State income tax filing free Interest income on frozen deposits. State income tax filing free   Exclude from your gross income interest on frozen deposits. State income tax filing free 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. State income tax filing free   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). State income tax filing free 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. State income tax filing free   The interest you exclude is treated as credited to your account in the following year. State income tax filing free You must include it in income in the year you can withdraw it. State income tax filing free Example. State income tax filing free $100 of interest was credited on your frozen deposit during the year. State income tax filing free You withdrew $80 but could not withdraw any more as of the end of the year. State income tax filing free You must include $80 in your income and exclude $20 from your income for the year. State income tax filing free You must include the $20 in your income for the year you can withdraw it. State income tax filing free Bonds traded flat. State income tax filing free   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. State income tax filing free The defaulted or unpaid interest is not income and is not taxable as interest if paid later. State income tax filing free When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. State income tax filing free Interest that accrues after the date of purchase, however, is taxable interest income for the year it is received or accrued. State income tax filing free See Bonds Sold Between Interest Dates , later, for more information. State income tax filing free Below-market loans. State income tax filing free   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. State income tax filing free See Below-Market Loans in chapter 1 of Publication 550 for more information. State income tax filing free U. State income tax filing free S. State income tax filing free Savings Bonds This section provides tax information on U. State income tax filing free S. State income tax filing free savings bonds. State income tax filing free It explains how to report the interest income on these bonds and how to treat transfers of these bonds. State income tax filing free For other information on U. State income tax filing free S. State income tax filing free savings bonds, write to:  For series EE and I paper savings bonds: Bureau of the Public Debt Division of Customer Assistance P. State income tax filing free O. State income tax filing free Box 7012 Parkersburg, WV 26106-7012  For series EE and I electronic bonds: Bureau of the Public Debt Division of Customer Assistance P. State income tax filing free O. State income tax filing free Box 7015 Parkersburg, WV 26106–7015  For series HH/H: Bureau of the Public Debt Division of Customer Assistance P. State income tax filing free O. State income tax filing free Box 2186 Parkersburg, WV 26106-2186 Or, on the Internet, visit: www. State income tax filing free treasurydirect. State income tax filing free gov/indiv/indiv. State income tax filing free htm. State income tax filing free Accrual method taxpayers. State income tax filing free   If you use an accrual method of accounting, you must report interest on U. State income tax filing free S. State income tax filing free savings bonds each year as it accrues. State income tax filing free You cannot postpone reporting interest until you receive it or until the bonds mature. State income tax filing free Accrual methods of accounting are explained in chapter 1 under Accounting Methods . State income tax filing free Cash method taxpayers. State income tax filing free   If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U. State income tax filing free S. State income tax filing free savings bonds when you receive it. State income tax filing free The cash method of accounting is explained in chapter 1 under Accounting Methods. State income tax filing free But see Reporting options for cash method taxpayers , later. State income tax filing free Series HH bonds. State income tax filing free    These bonds were issued at face value. State income tax filing free Interest is paid twice a year by direct deposit to your bank account. State income tax filing free If you are a cash method taxpayer, you must report interest on these bonds as income in the year you receive it. State income tax filing free   Series HH bonds were first offered in 1980 and last offered in August 2004. State income tax filing free Before 1980, series H bonds were issued. State income tax filing free Series H bonds are treated the same as series HH bonds. State income tax filing free If you are a cash method taxpayer, you must report the interest when you receive it. State income tax filing free   Series H bonds have a maturity period of 30 years. State income tax filing free Series HH bonds mature in 20 years. State income tax filing free The last series H bonds matured in 2009. State income tax filing free Series EE and series I bonds. State income tax filing free   Interest on these bonds is payable when you redeem the bonds. State income tax filing free The difference between the purchase price and the redemption value is taxable interest. State income tax filing free Series EE bonds. State income tax filing free   Series EE bonds were first offered in January 1980 and have a maturity period of 30 years. State income tax filing free   Before July 1980, series E bonds were issued. State income tax filing free 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. State income tax filing free Paper series EE and series E bonds are issued at a discount. State income tax filing free The face value is payable to you at maturity. State income tax filing free Electronic series EE bonds are issued at their face value. State income tax filing free The face value plus accrued interest is payable to you at maturity. State income tax filing free As of January 1, 2012, paper savings bonds were no longer sold at financial institutions. State income tax filing free   Owners of paper series EE bonds can convert them to electronic bonds. State income tax filing free These converted bonds do not retain the denomination listed on the paper certificate but are posted at their purchase price (with accrued interest). State income tax filing free Series I bonds. State income tax filing free   Series I bonds were first offered in 1998. State income tax filing free These are inflation-indexed bonds issued at their face amount with a maturity period of 30 years. State income tax filing free The face value plus all accrued interest is payable to you at maturity. State income tax filing free Reporting options for cash method taxpayers. State income tax filing free   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. State income tax filing free Method 1. State income tax filing free Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year they mature. State income tax filing free (However, see Savings bonds traded , later. State income tax filing free )  Note. State income tax filing free Series EE bonds issued in 1983 matured in 2013. State income tax filing free If you have used method 1, you generally must report the interest on these bonds on your 2013 return. State income tax filing free The last series E bonds were issued in 1980 and matured in 2010. State income tax filing free If you used method 1, you generally should have reported the interest on these bonds on your 2010 return. State income tax filing free Method 2. State income tax filing free Choose to report the increase in redemption value as interest each year. State income tax filing free You must use the same method for all series EE, series E, and series I bonds you own. State income tax filing free If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1. State income tax filing free    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. State income tax filing free To learn how, see Education Savings Bond Program, later. State income tax filing free Change from method 1. State income tax filing free   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. State income tax filing free In the year of change you must report all interest accrued to date and not previously reported for all your bonds. State income tax filing free   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. State income tax filing free Change from method 2. State income tax filing free   To change from method 2 to method 1, you must request permission from the IRS. State income tax filing free Permission for the change is automatically granted if you send the IRS a statement that meets all the following requirements. State income tax filing free You have typed or printed the following number at the top: “131. State income tax filing free ” It includes your name and social security number under “131. State income tax filing free ” It includes the year of change (both the beginning and ending dates). State income tax filing free It identifies the savings bonds for which you are requesting this change. State income tax filing free 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. State income tax filing free   You must attach this statement to your tax return for the year of change, which you must file by the due date (including extensions). State income tax filing free   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. State income tax filing free On the statement, type or print “Filed pursuant to section 301. State income tax filing free 9100-2. State income tax filing free ” To get this extension, you must have filed your original return for the year of the change by the due date (including extensions). State income tax filing free    By the date you file the original statement with your return, you must also send a signed copy to the address below. State income tax filing free   Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) P. State income tax filing free O. State income tax filing free Box 7604 Benjamin Franklin Station Washington, DC 20044   If you use a private delivery service, send the signed copy to the address below. State income tax filing free   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. State income tax filing free In that case, follow the form instructions for an automatic change. State income tax filing free No user fee is required. State income tax filing free Co-owners. State income tax filing free   If a U. State income tax filing free S. State income tax filing free 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. State income tax filing free One co-owner's funds used. State income tax filing free    If you used your funds to buy the bond, you must pay the tax on the interest. State income tax filing free This is true even if you let the other co-owner redeem the bond and keep all the proceeds. State income tax filing free 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. State income tax filing free The co-owner who redeemed the bond is a “nominee. State income tax filing free ” 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. State income tax filing free Both co-owners' funds used. State income tax filing free   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. State income tax filing free Community property. State income tax filing free   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. State income tax filing free If you file separate returns, each of you generally must report one-half of the bond interest. State income tax filing free For more information about community property, see Publication 555. State income tax filing free Table 7-1. State income tax filing free   These rules are also shown in Table 7-1. State income tax filing free Ownership transferred. State income tax filing free   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. State income tax filing free But, if the bonds were reissued in your name alone, you do not have to report the interest accrued at that time. State income tax filing free   This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to divorce. State income tax filing free Purchased jointly. State income tax filing free   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. State income tax filing free 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. State income tax filing free This interest, however, as well as all interest earned after the reissue, is income to the former co-owner. State income tax filing free   This income-reporting rule also applies when the bonds are reissued in the name of your former co-owner and a new co-owner. State income tax filing free But the new co-owner will report only his or her share of the interest earned after the transfer. State income tax filing free   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. State income tax filing free    Table 7-1. State income tax filing free Who Pays the Tax on U. State income tax filing free S. State income tax filing free Savings Bond Interest IF . State income tax filing free . State income tax filing free . State income tax filing free THEN the interest must be reported by . State income tax filing free . State income tax filing free . State income tax filing free you buy a bond in your name and the name of another person as co-owners, using only your own funds you. State income tax filing free 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. State income tax filing free 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. State income tax filing free you and your spouse, who live in a community property state, buy a bond that is community property you and your spouse. State income tax filing free If you file separate returns, both you and your spouse generally report one-half of the interest. State income tax filing free Example 1. State income tax filing free You and your spouse each spent an equal amount to buy a $1,000 series EE savings bond. State income tax filing free The bond was issued to you and your spouse as co-owners. State income tax filing free You both postpone reporting interest on the bond. State income tax filing free You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. State income tax filing free At that time neither you nor your spouse has to report the interest earned to the date of reissue. State income tax filing free Example 2. State income tax filing free You bought a $1,000 series EE savings bond entirely with your own funds. State income tax filing free The bond was issued to you and your spouse as co-owners. State income tax filing free You both postpone reporting interest on the bond. State income tax filing free You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. State income tax filing free You must report half the interest earned to the date of reissue. State income tax filing free Transfer to a trust. State income tax filing free   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. State income tax filing free 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. State income tax filing free 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. State income tax filing free   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. State income tax filing free See Savings bonds traded , later. State income tax filing free Decedents. State income tax filing free   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. State income tax filing free This is explained in chapter 1 of Publication 550. State income tax filing free Savings bonds traded. State income tax filing free   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. State income tax filing free (You cannot trade series I bonds for series HH bonds. State income tax filing free After August 31, 2004, you cannot trade any other series of bonds for series HH bonds. State income tax filing free ) Any cash you received is income up to the amount of the interest earned on the bonds traded. State income tax filing free 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. State income tax filing free 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. State income tax filing free Example. State income tax filing free You traded series EE bonds (on which you postponed reporting the interest) for $2,500 in series HH bonds and $223 in cash. State income tax filing free You reported the $223 as taxable income on your tax return. State income tax filing free At the time of the trade, the series EE bonds had accrued interest of $523 and a redemption value of $2,723. State income tax filing free You hold the series HH bonds until maturity, when you receive $2,500. State income tax filing free You must report $300 as interest income in the year of maturity. State income tax filing free This is the difference between their redemption value, $2,500, and your cost, $2,200 (the amount you paid for the series EE bonds). State income tax filing free (It is also the difference between the accrued interest of $523 on the series EE bonds and the $223 cash received on the trade. State income tax filing free ) Choice to report interest in year of trade. State income tax filing free   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. State income tax filing free If you made this choice, it is treated as a change from method 1. State income tax filing free See Change from method 1 under Series EE and series I bonds, earlier. State income tax filing free Form 1099-INT for U. State income tax filing free S. State income tax filing free savings bonds interest. State income tax filing free   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. State income tax filing free 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. State income tax filing free However, your Form 1099-INT may show more interest than you have to include on your income tax return. State income tax filing free For example, this may happen if any of the following are true. State income tax filing free You chose to report the increase in the redemption value of the bond each year. State income tax filing free The interest shown on your Form 1099-INT will not be reduced by amounts previously included in income. State income tax filing free You received the bond from a decedent. State income tax filing free 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. State income tax filing free Ownership of the bond was transferred. State income tax filing free The interest shown on your Form 1099-INT will not be reduced by interest that accrued before the transfer. State income tax filing free You were named as a co-owner, and the other co-owner contributed funds to buy the bond. State income tax filing free The interest shown on your Form 1099-INT will not be reduced by the amount you received as nominee for the other co-owner. State income tax filing free (See Co-owners , earlier in this chapter, for more information about the reporting requirements. State income tax filing free ) You received the bond in a taxable distribution from a retirement or profit-sharing plan. State income tax filing free 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. State income tax filing free (This amount is generally shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. State income tax filing free , for the year of distribution. State income tax filing free )   For more information on including the correct amount of interest on your return, see How To Report Interest Income , later. State income tax filing free Publication 550 includes examples showing how to report these amounts. State income tax filing free    Interest on U. State income tax filing free S. State income tax filing free savings bonds is exempt from state and local taxes. State income tax filing free The Form 1099-INT you receive will indicate the amount that is for U. State income tax filing free S. State income tax filing free savings bond interest in box 3. State income tax filing free 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. State income tax filing free S. State income tax filing free savings bonds during the year if you pay qualified higher educational expenses during the same year. State income tax filing free This exclusion is known as the Education Savings Bond Program. State income tax filing free You do not qualify for this exclusion if your filing status is married filing separately. State income tax filing free Form 8815. State income tax filing free   Use Form 8815 to figure your exclusion. State income tax filing free Attach the form to your Form 1040 or Form 1040A. State income tax filing free Qualified U. State income tax filing free S. State income tax filing free savings bonds. State income tax filing free   A qualified U. State income tax filing free S. State income tax filing free savings bond is a series EE bond issued after 1989 or a series I bond. State income tax filing free The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). State income tax filing free You must be at least 24 years old before the bond's issue date. State income tax filing free 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. State income tax filing free    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. State income tax filing free Beneficiary. State income tax filing free   You can designate any individual (including a child) as a beneficiary of the bond. State income tax filing free Verification by IRS. State income tax filing free   If you claim the exclusion, the IRS will check it by using bond redemption information from the Department of the Treasury. State income tax filing free Qualified expenses. State income tax filing free   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. State income tax filing free   Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account. State income tax filing free   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. State income tax filing free Eligible educational institutions. State income tax filing free   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. State income tax filing free S. State income tax filing free Department of Education. State income tax filing free Reduction for certain benefits. State income tax filing free   You must reduce your qualified higher educational expenses by all of the following tax-free benefits. State income tax filing free Tax-free part of scholarships and fellowships (see Scholarships and fellowships in chapter 12). State income tax filing free Expenses used to figure the tax-free portion of distributions from a Coverdell ESA. State income tax filing free Expenses used to figure the tax-free portion of distributions from a qualified tuition program. State income tax filing free 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. State income tax filing free Any expense used in figuring the American Opportunity and lifetime learning credits. State income tax filing free Amount excludable. State income tax filing free   If the total proceeds (interest and principal) from the qualified U. State income tax filing free S. State income tax filing free 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. State income tax filing free If the proceeds are more than the expenses, you may be able to exclude only part of the interest. State income tax filing free   To determine the excludable amount, multiply the interest part of the proceeds by a fraction. State income tax filing free The numerator of the fraction is the qualified higher educational expenses you paid during the year. State income tax filing free The denominator of the fraction is the total proceeds you received during the year. State income tax filing free Example. State income tax filing free In February 2013, Mark and Joan, a married couple, cashed a qualified series EE U. State income tax filing free S. State income tax filing free savings bond they bought in April 1997. State income tax filing free They received proceeds of $8,372 representing principal of $5,000 and interest of $3,372. State income tax filing free In 2013, they paid $4,000 of their daughter's college tuition. State income tax filing free They are not claiming an education credit for that amount, and their daughter does not have any tax-free educational assistance. State income tax filing free They can exclude $1,611 ($3,372 × ($4,000 ÷ $8,372)) of interest in 2013. State income tax filing free They must pay tax on the remaining $1,761 ($3,372 − $1,611) interest. State income tax filing free Modified adjusted gross income limit. State income tax filing free   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. State income tax filing free 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. State income tax filing free   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. State income tax filing free   Use the Line 9 Worksheet in the Form 8815 instructions to figure your modified AGI. State income tax filing free 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. State income tax filing free   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. State income tax filing free Recordkeeping. State income tax filing free If you claim the interest exclusion, you must keep a written record of the qualified U. State income tax filing free S. State income tax filing free savings bonds you redeem. State income tax filing free Your record must include the serial number, issue date, face value, and total redemption proceeds (principal and interest) of each bond. State income tax filing free You can use Form 8818 to record this information. State income tax filing free You should also keep bills, receipts, canceled checks, or other documentation that shows you paid qualified higher educational expenses during the year. State income tax filing free U. State income tax filing free S. State income tax filing free Treasury Bills, Notes, and Bonds Treasury bills, notes, and bonds are direct debts (obligations) of the U. State income tax filing free S. State income tax filing free Government. State income tax filing free Taxation of interest. State income tax filing free   Interest income from Treasury bills, notes, and bonds is subject to federal income tax but is exempt from all state and local income taxes. State income tax filing free You should receive Form 1099-INT showing the interest (in box 3) paid to you for the year. State income tax filing free   Payments of principal and interest generally will be credited to your designated checking or savings account by direct deposit through the TreasuryDirect® system. State income tax filing free Treasury bills. State income tax filing free   These bills generally have a 4-week, 13-week, 26-week, or 52-week maturity period. State income tax filing free They are generally issued at a discount in the amount of $100 and multiples of $100. State income tax filing free The difference between the discounted price you pay for the bills and the face value you receive at maturity is interest income. State income tax filing free Generally, you report this interest income when the bill is paid at maturity. State income tax filing free 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. State income tax filing free Treasury notes and bonds. State income tax filing free   Treasury notes have maturity periods of more than 1 year, ranging up to 10 years. State income tax filing free Maturity periods for Treasury bonds are longer than 10 years. State income tax filing free Both generally are issued in denominations of $100 to $1 million and generally pay interest every 6 months. State income tax filing free Generally, you report this interest for the year paid. State income tax filing free For more information, see U. State income tax filing free S. State income tax filing free Treasury Bills, Notes, and Bonds in chapter 1 of Publication 550. State income tax filing free For other information on Treasury notes or bonds, write to:  Bureau of the Public Debt P. State income tax filing free O. State income tax filing free Box 7015 Parkersburg, WV 26106-7015 Or, on the Internet, visit: www. State income tax filing free treasurydirect. State income tax filing free gov/indiv/indiv. State income tax filing free htm. State income tax filing free For information on series EE, series I, and series HH savings bonds, see U. State income tax filing free S. State income tax filing free Savings Bonds , earlier. State income tax filing free Treasury inflation-protected securities (TIPS). State income tax filing free   These securities pay interest twice a year at a fixed rate, based on a principal amount adjusted to take into account inflation and deflation. State income tax filing free For the tax treatment of these securities, see Inflation-Indexed Debt Instruments under Original Issue Discount (OID), in Publication 550. State income tax filing free 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. State income tax filing free You must report that part of the sales price as interest income for the year of sale. State income tax filing free If you buy a bond between interest payment dates, part of the purchase price represents interest accrued before the date of purchase. State income tax filing free 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. State income tax filing free See Accrued interest on bonds under How To Report Interest Income in chapter 1 of Publication 550 for information on reporting the payment. State income tax filing free Insurance Life insurance proceeds paid to you as beneficiary of the insured person are usually not taxable. State income tax filing free But if you receive the proceeds in installments, you must usually report a part of each installment payment as interest income. State income tax filing free For more information about insurance proceeds received in installments, see Publication 525, Taxable and Nontaxable Income. State income tax filing free Annuity. State income tax filing free   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. State income tax filing free See chapter 10 for information on pension and annuity income from nonqualified plans. State income tax filing free 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. State income tax filing free 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. State income tax filing free 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. State income tax filing free 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. State income tax filing free Information reporting requirement. State income tax filing free   If you must file a tax return, you are required to show any tax-exempt interest you received on your return. State income tax filing free This is an information reporting requirement only. State income tax filing free It does not change tax-exempt interest to taxable interest. State income tax filing free Original Issue Discount (OID) Original issue discount (OID) is a form of interest. State income tax filing free 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. State income tax filing free A debt instrument generally has OID when the instrument is issued for a price that is less than its stated redemption price at maturity. State income tax filing free OID is the difference between the stated redemption price at maturity and the issue price. State income tax filing free All debt instruments that pay no interest before maturity are presumed to be issued at a discount. State income tax filing free Zero coupon bonds are one example of these instruments. State income tax filing free 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). State income tax filing free See Discount on Short-Term Obligations in chapter 1 of Publication 550. State income tax filing free De minimis OID. State income tax filing free   You can treat the discount as zero if it is less than one-fourth of 1% (. State income tax filing free 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. State income tax filing free This small discount is known as “de minimis” OID. State income tax filing free Example 1. State income tax filing free You bought a 10-year bond with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. State income tax filing free 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. State income tax filing free Because the $20 discount is less than $25, the OID is treated as zero. State income tax filing free (If you hold the bond at maturity, you will recognize $20 ($1,000 − $980) of capital gain. State income tax filing free ) Example 2. State income tax filing free The facts are the same as in Example 1, except that the bond was issued at $950. State income tax filing free The OID is $50. State income tax filing free 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. State income tax filing free Debt instrument bought after original issue. State income tax filing free   If you buy a debt instrument with de minimis OID at a premium, the discount is not includible in income. State income tax filing free If you buy a debt instrument with de minimis OID at a discount, the discount is reported under the market discount rules. State income tax filing free See Market Discount Bonds in chapter 1 of Publication 550. State income tax filing free Exceptions to reporting OID. State income tax filing free   The OID rules discussed in this chapter do not apply to the following debt instruments. State income tax filing free Tax-exempt obligations. State income tax filing free (However, see Stripped tax-exempt obligations under Stripped Bonds and Coupons in chapter 1 of Publication 550). State income tax filing free U. State income tax filing free S. State income tax filing free savings bonds. State income tax filing free Short-term debt instruments (those with a fixed maturity date of not more than 1 year from the date of issue). State income tax filing free Obligations issued by an individual before March 2, 1984. State income tax filing free Loans between individuals if all the following are true. State income tax filing free The lender is not in the business of lending money. State income tax filing free The amount of the loan, plus the amount of any outstanding prior loans between the same individuals, is $10,000 or less. State income tax filing free Avoiding any federal tax is not one of the principal purposes of the loan. State income tax filing free Form 1099-OID. State income tax filing free   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. State income tax filing free Form 1099-OID will show, in box 1, the amount of OID for the part of the year that you held the bond. State income tax filing free It also will show, in box 2, the stated interest you must include in your income. State income tax filing free A copy of Form 1099-OID will be sent to the IRS. State income tax filing free Do not file your copy with your return. State income tax filing free Keep it for your records. State income tax filing free   In most cases, you must report the entire amount in boxes 1 and 2 of Form 1099-OID as interest income. State income tax filing free But see Refiguring OID shown on Form 1099-OID, later in this discussion, for more information. State income tax filing free Form 1099-OID not received. State income tax filing free   If you had OID for the year but did not receive a Form 1099-OID, you can find tables on IRS. State income tax filing free gov that list total OID on certain debt instruments and have information that will help you figure OID. State income tax filing free For the latest OID tables, go to www. State income tax filing free irs. State income tax filing free gov and enter “OID tables” in the Search box. State income tax filing free If your debt instrument is not listed, consult the issuer for further information about the accrued OID for the year. State income tax filing free Nominee. State income tax filing free   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. State income tax filing free Refiguring OID shown on Form 1099-OID. State income tax filing free   You must refigure the OID shown in box 1 or box 8 of Form 1099-OID if either of the following apply. State income tax filing free You bought the debt instrument after its original issue and paid a premium or an acquisition premium. State income tax filing free The debt instrument is a stripped bond or a stripped coupon (including certain zero coupon instruments). State income tax filing free 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. State income tax filing free Refiguring periodic interest shown on Form 1099-OID. State income tax filing free   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. State income tax filing free Certificates of deposit (CDs). State income tax filing free   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. State income tax filing free   This also applies to similar deposit arrangements with banks, building and loan associations, etc. State income tax filing free , including: Time deposits, Bonus plans, Savings certificates, Deferred income certificates, Bonus savings certificates, and Growth savings certificates. State income tax filing free Bearer CDs. State income tax filing free   CDs issued after 1982 generally must be in registered form. State income tax filing free Bearer CDs are CDs not in registered form. State income tax filing free They are not issued in the depositor's name and are transferable from one individual to another. State income tax filing free   Banks must provide the IRS and the person redeeming a bearer CD with a Form 1099-INT. State income tax filing free More information. State income tax filing free   See chapter 1 of Publication 550 for more information about OID and related topics, such as market discount bonds. State income tax filing free 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. State income tax filing free Cash method. State income tax filing free   Most individual taxpayers use the cash method. State income tax filing free If you use this method, you generally report your interest income in the year in which you actually or constructively receive it. State income tax filing free However, there are special rules for reporting the discount on certain debt instruments. State income tax filing free See U. State income tax filing free S. State income tax filing free Savings Bonds and Original Issue Discount (OID) , earlier. State income tax filing free Example. State income tax filing free On September 1, 2011, you loaned another individual $2,000 at 12%, compounded annually. State income tax filing free You are not in the business of lending money. State income tax filing free The note stated that principal and interest would be due on August 31, 2013. State income tax filing free In 2013, you received $2,508. State income tax filing free 80 ($2,000 principal and $508. State income tax filing free 80 interest). State income tax filing free If you use the cash method, you must include in income on your 2013 return the $508. State income tax filing free 80 interest you received in that year. State income tax filing free Constructive receipt. State income tax filing free   You constructively receive income when it is credited to your account or made available to you. State income tax filing free You do not need to have physical possession of it. State income tax filing free 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. State income tax filing free This is true even if they are not yet entered in your passbook. State income tax filing free   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. State income tax filing free Accrual method. State income tax filing free   If you use an accrual method, you report your interest income when you earn it, whether or not you have received it. State income tax filing free Interest is earned over the term of the debt instrument. State income tax filing free Example. State income tax filing free If, in the previous example, you use an accrual method, you must include the interest in your income as you earn it. State income tax filing free You would report the interest as follows: 2011, $80; 2012, $249. State income tax filing free 60; and 2013, $179. State income tax filing free 20. State income tax filing free Coupon bonds. State income tax filing free   Interest on coupon bonds is taxable in the year the coupon becomes due and payable. State income tax filing free It does not matter when you mail the coupon for payment. State income tax filing free 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. State income tax filing free You cannot use Form 1040EZ if your taxable interest income is more than $1,500. State income tax filing free Instead, you must use Form 1040A or Form 1040. State income tax filing free Form 1040A. State income tax filing free   You must complete Schedule B (Form 1040A or 1040), Part I, if you file Form 1040A and any of the following are true. State income tax filing free Your taxable interest income is more than $1,500. State income tax filing free You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier). State income tax filing free You received interest from a seller-financed mortgage, and the buyer used the property as a home. State income tax filing free You received a Form 1099-INT for U. State income tax filing free S. State income tax filing free savings bond interest that includes amounts you reported before 2013. State income tax filing free You received, as a nominee, interest that actually belongs to someone else. State income tax filing free You received a Form 1099-INT for interest on frozen deposits. State income tax filing free You are reporting OID in an amount less than the amount shown on Form 1099-OID. State income tax filing free You received a Form 1099-INT for interest on a bond you bought between interest payment dates. State income tax filing free 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). State income tax filing free List each payer's name and the amount of interest income received from each payer on line 1. State income tax filing free If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer. State income tax filing free   You cannot use Form 1040A if you must use Form 1040, as described next. State income tax filing free Form 1040. State income tax filing free   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. State income tax filing free Schedule B (Form 1040A or 1040). State income tax filing free   You must complete Schedule B (Form 1040A or 1040), Part I, if you file Form 1040 and any of the following apply. State income tax filing free Your taxable interest income is more than $1,500. State income tax filing free You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier). State income tax filing free You received interest from a seller-financed mortgage, and the buyer used the property as a home. State income tax filing free You received a Form 1099-INT for U. State income tax filing free S. State income tax filing free savings bond interest that includes amounts you reported before 2013. State income tax filing free You received, as a nominee, interest that actually belongs to someone else. State income tax filing free You received a Form 1099-INT for interest on frozen deposits. State income tax filing free You received a Form 1099-INT for interest on a bond you bought between interest payment dates. State income tax filing free You are reporting OID in an amount less than the amount shown on Form 1099-OID. State income tax filing free Statement (2) in the preceding list under Form 1040 is true. State income tax filing free In Part I, line 1, list each payer's name and the amount received from each. State income tax filing free If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer. State income tax filing free Reporting tax-exempt interest. State income tax filing free   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. State income tax filing free Add these amounts to any other tax-exempt interest you received. State income tax filing free Report the total on line 8b of Form 1040A or 1040. State income tax filing free   If you file Form 1040EZ, enter “TEI” and the amount in the space to the left of line 2. State income tax filing free Do not add tax-exempt interest in the total on Form 1040EZ, line 2. State income tax filing free   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. State income tax filing free These amounts are already included in the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 10. State income tax filing free 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. State income tax filing free    Do not report interest from an individual retirement account (IRA) as tax-exempt interest. State income tax filing free Form 1099-INT. State income tax filing free   Your taxable interest income, except for interest from U. State income tax filing free S. State income tax filing free savings bonds and Treasury obligations, is shown in box 1 of Form 1099-INT. State income tax filing free Add this amount to any other taxable interest income you received. State income tax filing free You must report all of your taxable interest income even if you do not receive a Form 1099-INT. State income tax filing free Generally, contact your financial institution if you do not receive a Form 1099-INT by February 15. State income tax filing free Your identifying number may be truncated on any paper Form 1099-INT you receive. State income tax filing free   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. State income tax filing free See Penalty on early withdrawal of savings in chapter 1 of Publication 550. State income tax filing free   Box 3 of Form 1099-INT shows the interest income you received from U. State income tax filing free S. State income tax filing free savings bonds, Treasury bills, Treasury notes, and Treasury bonds. State income tax filing free 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. State income tax filing free If part of the amount shown in box 3 was previously included in your interest income, see U. State income tax filing free S. State income tax filing free savings bond interest previously reported , later. State income tax filing free   Box 4 of Form 1099-INT will contain an amount if you were subject to backup withholding. State income tax filing free 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). State income tax filing free   Box 5 of Form 1099-INT shows investment expenses you may be able to deduct as an itemized deduction. State income tax filing free See chapter 28 for more information about investment expenses. State income tax filing free   If there are entries in boxes 6 and 7 of Form 1099-INT, you must file Form 1040. State income tax filing free 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). State income tax filing free To take the credit, you may have to file Form 1116, Foreign Tax Credit. State income tax filing free For more information, see Publication 514, Foreign Tax Credit for Individuals. State income tax filing free U. State income tax filing free S. State income tax filing free savings bond interest previously reported. State income tax filing free   If you received a Form 1099-INT for U. State income tax filing free S. State income tax filing free savings bond interest, the form may show interest you do not have to report. State income tax filing free See Form 1099-INT for U. State income tax filing free S. State income tax filing free savings bonds interest , earlier, under U. State income tax filing free S. State income tax filing free Savings Bonds. State income tax filing free   On Schedule B (Form 1040A or 1040), Part I, line 1, report all the interest shown on your Form 1099-INT. State income tax filing free Then follow these steps. State income tax filing free Several lines above line 2, enter a subtotal of all interest listed on line 1. State income tax filing free Below the subtotal enter “U. State income tax filing free S. State income tax filing free Savings Bond Interest Previously Reported” and enter amounts previously reported or interest accrued before you received the bond. State income tax filing free Subtract these amounts from the subtotal and enter the result on line 2. State income tax filing free More information. State income tax filing free   For more information about how to report interest income, see chapter 1 of Publication 550 or the instructions for the form you must file. State income tax filing free Prev  Up  Next   Home   More Online Publications