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income on your tax return. 1040 In general, any interest you receive or that is credited to your account and can be withdrawn is taxable income. 1040 Exceptions to this rule are discussed later in this chapter. 1040 You may be able to deduct expenses you have in earning this income on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

Address: Better Business Bureau
254 Moulton St., E
Decatur, AL 35601

Phone Number: 256-355-2226

Dothan, AL

Website: Better Business Bureau

Email: info@centralalabama.bbb.org

Address: Better Business Bureau
1971 S. Brannon Stand Rd., Suite 1
Dothan, AL 36305

Phone Number: 334-794-0492

Florence, AL

Website: Better Business Bureau

Address: Better Business Bureau
205 S. Seminary St., Suite 114
Florence, AL 35630

Phone Number: 256-740-8224

Huntsville, AL

Website: Better Business Bureau

Address: Better Business Bureau
210A Exchange Pl.
Huntsville, AL 35806

Phone Number: 256-533-1640

Toll-free: 1-800-239-1642

Mobile, AL

Website: Better Business Bureau

Address: Better Business Bureau
960 S. Schillinger Rd., Suite I
Mobile, AL 36695

Phone Number: 251-433-5494

The 1040

1040 Publication 584-B - Additional Material Table of Contents This image is too large to be displayed in the current screen. 1040 Please click the link to view the image. 1040 Office Furniture and Fixtures This image is too large to be displayed in the current screen. 1040 Please click the link to view the image. 1040 Information Systems This image is too large to be displayed in the current screen. 1040 Please click the link to view the image. 1040 Motor Vehicles This image is too large to be displayed in the current screen. 1040 Please click the link to view the image. 1040 Office Supplies This image is too large to be displayed in the current screen. 1040 Please click the link to view the image. 1040 Building, Components, and Land This image is too large to be displayed in the current screen. 1040 Please click the link to view the image. 1040 Equipment Tax Publications for Individual TaxpayersSee How To Get Tax Help for a variety of ways to get publications, including by computer, phone, and mail. 1040 General Guides 1 Your Rights as a Taxpayer 17 Your Federal Income Tax For Individuals 334 Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ) 509 Tax Calendars for 2012 910 IRS Guide to Free Tax Services Specialized Publications 3 Armed Forces’ Tax Guide 54 Tax Guide for U. 1040 S. 1040 Citizens and Resident Aliens Abroad 225 Farmer’s Tax Guide 463 Travel, Entertainment, Gift, and Car Expenses 501 Exemptions, Standard Deduction, and Filing Information 502 Medical and Dental Expenses (Including the Health Coverage Tax Credit) 503 Child and Dependent Care Expenses 504 Divorced or Separated Individuals 505 Tax Withholding and Estimated Tax 514 Foreign Tax Credit for Individuals 516 U. 1040 S. 1040 Government Civilian Employees Stationed Abroad 517 Social Security and Other Information for Members of the Clergy and Religious Workers 519 U. 1040 S. 1040 Tax Guide for Aliens 521 Moving Expenses 523 Selling Your Home 524 Credit for the Elderly or the Disabled 525 Taxable and Nontaxable Income 526 Charitable Contributions 527 Residential Rental Property (Including Rental of Vacation Homes) 529 Miscellaneous Deductions 530 Tax Information for Homeowners 531 Reporting Tip Income 535 Business Expenses 536 Net Operating Losses (NOLs) for Individuals, Estates, and Trusts 537 Installment Sales 541 Partnerships 544 Sales and Other Dispositions of Assets 547 Casualties, Disasters, and Thefts 550 Investment Income and Expenses (Including Capital Gains and Losses) 551 Basis of Assets 554 Tax Guide for Seniors 555 Community Property 556 Examination of Returns, Appeal Rights, and Claims for Refund 559 Survivors, Executors, and Administrators 561 Determining the Value of Donated Property 570 Tax Guide for Individuals With Income From U. 1040 S. 1040 Possessions 571 Tax-Sheltered Annuity Plans (403(b) Plans) For Employees of Public Schools and Certain Tax-Exempt Organizations 575 Pension and Annuity Income 584 Casualty, Disaster, and Theft Loss Workbook (Personal-Use Property) 587 Business Use of Your Home (Including Use by Daycare Providers) 590 Individual Retirement Arrangements (IRAs) 594 The IRS Collection Process 596 Earned Income Credit (EIC) 721 Tax Guide to U. 1040 S. 1040 Civil Service Retirement Benefits 901 U. 1040 S. 1040 Tax Treaties 907 Tax Highlights for Persons with Disabilities 908 Bankruptcy Tax Guide 915 Social Security and Equivalent Railroad Retirement Benefits 925 Passive Activity and At-Risk Rules 926 Household Employer’s Tax Guide For Wages Paid in 2012 929 Tax Rules for Children and Dependents 936 Home Mortgage Interest Deduction 946 How To Depreciate Property 947 Practice Before the IRS and Power of Attorney 950 Introduction to Estate and Gift Taxes 969 Health Savings Accounts and Other Tax-Favored Health Plans 970 Tax Benefits for Education 971 Innocent Spouse Relief 972 Child Tax Credit 1542 Per Diem Rates (For Travel Within the Continental United States) 1544 Reporting Cash Payments of Over $10,000 (Received in a Trade or Business) 1546 Taxpayer Advocate Service – Your Voice at the IRS Spanish Language Publications 1SP Derechos del Contribuyente 17(SP) El Impuesto Federal sobre los Ingresos Para Personas Fisicas 547(SP) Hechos Fortuitos Desastres y Robos 584(SP) Registro de Pérdidas por Hechos Fortuitos (Imprevistos), Desastres y Robos (Propiedad de Uso Personal) 594SP El Proceso de Cobro del IRS 596SP Crédito por Ingreso del Trabajo 850(EN/SP) English-Spanish Glossary of Words and Phrases Used in Publications Issued by the Internal Revenue Service 1544 (SP) Informe de Pagos en Efectivo en Exceso de $10,000 (Recibidos en una Ocupación o Negocio) Commonly Used Tax FormsSee How To Get Tax Help for a variety of ways to get forms, including by computer, phone, and mail. 1040 Form Number and Title 1040 U. 1040 S. 1040 Individual Income Tax Return Sch A Itemized Deductions Sch B Interest and Ordinary Dividends Sch C Profit or Loss From Business Sch C-EZ Net Profit From Business Sch D Capital Gains and Losses Sch E Supplemental Income and Loss Sch EIC Earned Income Credit Sch F Profit or Loss From Farming Sch H Household Employment Taxes Sch J Income Averaging for Farmers and Fishermen Sch R Credit for the Elderly or the Disabled Sch SE Self-Employment Tax 1040A U. 1040 S. 1040 Individual Income Tax Return Sch B Interest and Ordinary Dividends 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1040-ES Estimated Tax for Individuals 1040X Amended U. 1040 S. 1040 Individual Income Tax Return 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts 2441 Child and Dependent Care Expenses 2848 Power of Attorney and Declaration of Representative 2848(SP) Poder Legal y Declaración del Representante 3903 Moving Expenses 4562 Depreciation and Amortization 4868 Application for Automatic Extension of Time To File U. 1040 S. 1040 Individual Income Tax Return 4868(SP) Solicitud de Prórroga Automática para Presentar la Declaración del Impuesto sobre el Ingreso Personal de los Estados Unidos 4952 Investment Interest Expense Deduction 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts 6251 Alternative Minimum Tax—Individuals 8283 Noncash Charitable Contributions 8582 Passive Activity Loss Limitations 8606 Nondeductible IRAs 8812 Additional Child Tax Credit 8822 Change of Address 8829 Expenses for Business Use of Your Home 8863 Education Credits (American Opportunity and Lifetime Learning Credits) 8949 Sales and Other Dispositions of Capital Assets 9465 Installment Agreement Request 9465(SP) Solicitud para un Plan de Pagos a Plazos         Prev  Up  Next   Home   More Online Publications