Visit the Marietta Development Authority's webpage to learn more about MDA bond financing or contact The Economic Development Division for assistance. 2 or $253,000. For a private activity bond to be tax-exempt, 95% or more of the net. Taxable OID, tax-exempt OID and bond premium are reported on Form 1099-OID. In box 112 - FS, enter S. Is the line 8 amount already "adjusted" for the line 13 amount, or is the interest I sh. Click on the box My form has info in more than just these boxes (this is uncommon). Fields highlighted in yellow import into the UltraTax CS Source Data Entry application. 00 Box 11 Tax-exempt OID is generally reported as tax-exempt interest on Form 1040. However, each. amount of bond premium amortization for the tax year. Make a note for next year's file. (a)(1) through (a)(4)(i)(B) [Reserved]. Then select Tools. 25% equals 4. However, if you acquired a tax-exempt bond at a premium, only report the net amount of tax-exempt interest on line 2a of your Form 1040 or 1040-SR (that is, the excess of the tax-exempt interest received during the year over the amortized bond premium for the year). Box 10 shows bond premium amortization. Currently our investments are 33% in tax deferred accounts, 5% in Roths and >60% in taxable accounts. See § 1. Note: Enter the amount of bond premium adjustment that should carry to Schedule B as amortized bond premium adjustment. You have it backwards unfortunately. Bonds and bond funds are taxed in 2 ways—based on the income that's distributed and on any gains if the investment is sold at a profit. §1. The financing is. 1272-2(a):To report this on your tax return, you can follow these steps: Enter the Tax Exempt OID ($3700) on Form 1040, Line 2a as tax-exempt interest. Once information is completed, Lacerte generates an election statement with the election language and bond information. What if I have income from obligationsAn individual who received $421 in interest from bonds issued by another state and purchased after December 31, 2011, will have to “add back” $421 to the amount of income used to calculate the tax obligation for Indiana. your basis at the call date after amortizing the premium using the yield to call. See the instructions above for a tax-exempt covered security acquired at a premium. Enter your 1099-INT information, select Continue. The account was opened late. This is the upper limit for the deduction of distributions made to. For a specified private activity bond with OID, report the tax-exempt OID in box 11 on Form 1099-OID and the tax-exempt stated interest in boxes 8 and 9 on Form 1099-INT. Bonds are still "exempt" from GST/HST and premiums do not include the 5% (or higher in harmonized jurisdictions) tax levy. For this example, Form 1099-Int has 17,000 in box 3 (for treasury bonds) so on the state return (SC) there's a subtraction from federal taxable income for 17,000 on page 2 of SC1040 to arrive at state taxable income which makes perfect sense to me since treasury bond interest is nontaxable to the state. F. IF you don't, the accrued interest will be divided up proportionately (and improperly) among boxes 1, 3. I think you meant Box 13 on 1099-INT. S. The tax reporting requirements outlined are not appli-cable if bonds are owned inside an IRA or other retirement plans. For Pennsylvania personal income tax purposes, a premium paid on a bond is deemed to be an investment in the bond to obtain the higher bond interest rate. When the bond matures, the bondholder will. Submitted by David Ch on 05-04-2021 03:18 PM. What should I do with this? A muni bond was also sold, 1099-B reports same amount as cost basis $10,000 and sales price of $10,000. Panama Canal Zone Bonds (exempt under 31 U. Form . In Schedule B, you should see under "ABP Adjustment" the negative of the sum of. If your client is subject to state tax, you'd need to look at the supplemental info to determine the out of state portion that would be subject to tax in each state. In Box 85 - Bond premium on tax-exempt bond, enter the amount of bond premium related to the federal tax-exempt interest. Box 13. Vanguard today launched the Vanguard Short-Term Tax-Exempt Bond ETF (NYSE Arca: VTES). This is all very confusing in light of 1. Expense ratio. This amount is included in line 8. While still exempt from Federal Income Tax, such amounts will be reported to the Internal Revenue Service. With a shorter-term bond, the risk premium is not as great. In Box 110 - Additional amount, right-click on the box and select List . The firm will publicly name Lee Chu as a portfolio manager at. Instead, the non home state bond premiums are adjusted on the other subtractions section of the state return. One measure of the price volatility of a bond is its modified duration. On the 1099-INT box 13 has an amount of $ 13,833 of which all is under "Tax-exempt obligations (covered lots)". Report the bond’s interest on Schedule B (Form 1040A or 1040), line 1. TTB, Pub 17 & Pub 550 seem to say the Acquisition premium of a tax exempt bond must be amortized - but how is this done? tax-exempt bonds and, if a tax-exempt OID bond purchased at the issue price in the initial offering is held to maturity, any OID associated with the bond would be treated as tax-exempt interest. read more Bond premium Bond premium on Treasury obligations Bond premium on tax-exempt bond Tax-exempt and tax credit bond CUSIP no. - "Continue". Select I need to adjust the taxable amount, select Continue. In line 16 - (11) Bond premium, enter the amount. read more03-06-2023, 09:01 PM. R. There are three entries block 7 the description (name), box 11 Tax exempt OID ($3700) and block 6 acquisition premium ($790). 37 billion invested in 4,926 different holdings. So if you did report it, it would be on Schedule B (which the Sch B totals carry over to the front page of the 1040). NUVEEN INSD TAX-FREE ADVANTAGE MUN FD 1. What if I have income from obligationsAn individual who received $421 in interest from bonds issued by another state and purchased after December 31, 2011, will have to “add back” $421 to the amount of income used to calculate the tax obligation for Indiana. Seeks current income exempt from federal tax. See § 6. including tax-exempt muni bond interest, is between $32,000 and. Since the coupon rate is paid semi-annually, it means that every six months, a coupon of $25 ($1,000 x 5/2) will. 03-31-2023, 08:59 AM. (iii) Bond premium allocable to the first accrual period. It is possible to acquire an OID bond in the secondary market at a premium. Interest from private activity bonds generally is not taxable, however interest. In TaxSlayer Pro, tax-exempt interest and dividend income can be entered from two different menus within Form 1041. A Longstaff study found that the marginal tax rate embedded into the short term tax-exempt municipal rates is able to identify an average marginal tax rate during a particular period of 41. Above those thresholds, up to 85% of your benefits could be taxed. If a net amount of interest appears in box 8 or 9, whichever is applicable, box 13 will be blank. However, if tax-exempt bonds incorporate a tax-related convenience premium, these premia may be larger in high-tax states where the protection from taxation these bonds provide may be particularly prized by tax-averse investors. Deduct the Acquisition Premium ($790) from the Tax Exempt OID to get the taxable amount ($3700 - $790 = $2910). But, Turbo Tax is only adding the excess of tax exempt interest over bond premium on tax exempt bonds (similar to the calculation on line 2a of Form 1040) to federal AGI to arrive at CT AGI. Gen. Client has 1099-Int and within the paperwork there is an amount for "Noncovered Bond Premium on Tax-Exempt Bond" and an amount for Welcome back! Ask questions, get answers, and join our large community of tax professionals. Tax-exempt interest $ 9 . U. S. of interest income. Enter the state that pays your tax-exempt. " When an existing bond offers a higher coupon rate than the rate currently offered on new bonds, it typically trades above (premium) its par value on the secondary market and becomes a premium bond. *** This is important tax information and is being furnished to the Internal Revenue Service. 8 billion Vanguard Tax-Exempt. Credit Quality / Interest Rate Sensitivity —. Options. So, for example, if your Acq. 00 5- Investment expenses 0. 73. Bonds and bond funds are taxed in 2 ways—based on the income that's distributed and on any gains if the investment is sold at a profit. Box 8 is showing the gross / total interest I received on these bonds, but there is nothing showing in other boxes (including box 13), even though I bought these bonds at a premium. Please note tax-exempt income dividends paid by the tax-free ETFs are exempt from Federal Income Tax and will be reported on Form 1099-DIV. • Line 4: Federal Income Tax Withheld – Shows the total amount of interest income withholding. That is the amortized premium paid above and beyond interest payable on covered securities and is used to offset interest received. *. Bond Premium on tax-exempt bonds - 1099Hello,I am preparing a tax return for a client that has nothing but tax-exempt muni bonds in her portfolio. 1, 2023. The IRS says: "For bonds issued after September 27, 1985, you must amortize bond premium using a constant yield method on the basis of the bond's yield to maturity, determined by using the bond's basis and compounding at the close of each accrual period. By contrast, premium bonds are rarely offered in the taxable market. See the instructions above for a tax-exempt covered security acquired at a premium. 02 Economics of Tax-Exempt Bonds 3 [1] Economic Benefits 3 [2] Bond Ratings 4 [3] Credit Enhancement 8 [4] Alternatives to Traditional Credit Enhancement 11 [5] Range of Costs 12 [6] Tax-Exempt Housing Bonds 12 1. 000% Dated Date: 05/01/2020 Maturity Date: 02/15/2027acquired with acquisition premium. (yield to worst for callable bonds. This is the difference between the redemption price ($100) and the issue price that would produce a YTM of 10% (0. § 1. However, in the case of a taxable bond, if you have been How to report acquisition premium on tax exempt bonds. Refer to the screenshots below. As of November 13, 2023, the fund has assets totaling almost $16. Bond premium $ 12 . Interest on the bond may also be exempt from local and state income taxes, which can further lower interest rates (so that they are below comparable taxable debt). Click Start or Update next to Interest on 1099-INT. On January 15, 1999, C purchases for $120,000 a tax-exempt obligation maturing on January 15, 2006, with a stated principal amount of $100,000, payable at maturity. (1) The amount of any bond premium shall be allocated among the interest payments on the bond under rules similar to the rules of subdivision (c) of Section 24361. Under your last entry on line 1, put a subtotal of all interest listed on line 1. Back to Table of ContentsThis article will help you input 1099-INT amounts into Lacerte. X Box 15 State B&D Interest Income State Box 16 State identification no. The New Jersey return asks what portion is tax exempt (due to federal or New Jersey obligations). They also won’t incur a capital loss at maturity since the premium. Reporting bond premium amortization for noncovered tax-exempt municipal bonds. Under Wages & Income select Interest on 1099-INT. Ask Your Own Tax Question. Because discount bonds are sold below face value, it is expected. (iii) Bond premium allocable to the first accrual period. Reporting interest and bond premium. S Treasury securities. Investor class expense ratios include 0. 6%, and that marginal tax rate is significantly positively related to the returns in the stock and bond markets. Solved: will negative interest income due to accrued. • the bond-financed property will be OWNED by the governmental unit. Under § 1. 1. The fund trades on the New York Stock Exchange and comes attached with a 0. 113–295, § 221(a)(29)(A), amended subpar. 02-17-2020 09:00 AM. 42%. The last three. To enter the bond premium in Turbo Tax, Go to Income. See the Instructions for Form 6251, Alternative Minimum Tax for Individuals. Except as provided in paragraph (c)(3) of this section, a taxable bond is any bond other than a tax-exempt obligation. For a covered security acquired with bond premium, you must report the amount of bond premium amortization for the tax year. State identification no. a facility financed with tax-exempt bonds, the research agreements may result in the bonds meeting the private business use test. Enter the amount in Amortizable bond premium on tax-exempt bonds. The following table indicates the reduction in “cost of securities sold” which Y should make for the years shown, assuming that. Box 12 refers specifically to the bond premium on U. 171–2(a)(4)(i)(B) as of the end of the holder's accrual period in which the bond is sold, retired, or otherwise disposed of, the holder. For example, a bond with a $1,000 face value may be sold for $900. Fiduciary bond premiums; Legal publication costs of notices to creditors or heirs;. The TurboTax community is the source for answers to all your questions on a range of taxes and other financial topics. How to enter an election to amortize bond premium. SEC Yield: 4%. Because the interest payments on the debt instrument are qualified stated interest, the stated redemption price at maturity of the debt instrument is $100,000. 35% 7. Vanguard Short-Term Tax. Amortization of bond premium under IRC Section 171; For. When sold for more of the face value, they are sold with a premium; when less than face value, a discount. The new municipal bond index ETF is designed for tax-sensitive investors with a. The payer may, but is not required to, report the OID for a tax-exempt obligation that is a covered security acquired before. If you are required to file a return, a negligence penalty or other. But, Turbo Tax is only adding the excess of tax exempt interest over bond premium on tax exempt bonds (similar to the calculation on line 2a of. If you receive income from bonds or other obligations that are exempt from Illinois Income Tax, the exempt amount you are entitled to claim is the interest net of bond premium amortization. Most interest that you either receive or is credited to an account that you can withdraw without penalty is taxable income in the year it becomes available to you. 22-Sep-2019 6:06am. (March 27, 2023) As part of ongoing efforts to improve service for the tax-advantaged bond community, the IRS accepts electronic filing of Form 8038-CP, Return for Credit. These are all from municipal bonds which are tax-free. The tax exempt interest from your bond will be reported as a net amount on line 2a of Form 1040. This limitation on tax-exempt OID ensuresThe amortization of a bond premium on a tax-exempt bond is the excess on its face value or the premium and part of the premium can be deducted from the interests. Box 1 - Original issue discount. bonds, T-bills, etc. In the next page, - enter the NON-covered premium amount as a positive number, and. At least 75% of the securities held by the fund are municipal bonds in the top three credit-rating categories as determined by a nationally. For example, an investor in a 25% tax bracket would receive the same after-tax income from a tax-exempt bond bearing interest at 6% that he or she would receive from a taxable obligation. Under § 1. Follow these steps to make a manual adjustment for the bond premium you paid on your tax-exempt and taxable bonds: Select Federal Taxes Under Wages &. 4- Federal income tax withheld 0. This means that a 20-year municipal bond that yields 2. 1099-OID. 10) ($82. The remaining 40 percent are taxed at your ordinary income. The DNI of $73,450 is calculated on line 7 of Schedule B. Since Connecticut taxes interest on out-of-state bonds, the taxpayer adds back. I've posted on this in early March but still am having trouble understanding how to amortize the ABP amount on a Municipal bond. While municipal bonds are available in both taxable and tax-exempt formats, the tax-exempt bonds tend to get the most attention because the income they generate is, for. Reg. 9. If adjustments for bond premiums are not reflected on your 1099-INT, you can manually enter the bond premium adjustment in the 1099-INT section of TurboTax. 70 years. System’s Associate Vice Chancellor for Finance and other appropriate System staff will ensure that immediately following the issuance of tax-exempt debt, the following occurs: 5. R. The TIC for the most recent tax-exempt bond sale on June 8, 2022, was. Section 171 (a) (2). Issued on or before 9/27/85. A Specified Private Activity Bond is issued to encourage private-sector investment in the development of certain facilities that serve specified public purposes, Included are exempt interest dividends paid by mutual funds that are attributable to like activities. Follow these steps to make a manual adjustment for the bond premium you paid on your tax-exempt bonds: Select Federal Taxes; Under Wages & Income select Interest on 1099-INT; Enter your 1099-INT information, select Continue; Select I need to adjust the taxable amount, select Continue; Enter the state that pays your tax-exempt. gn. Enter a description and a positive amount for the state tax-exempt interest. Bond premium on tax-exempt bond $ 14 . Savers are allowed to buy up to $5,000 of I Bonds directly if they're receiving a tax refund when they file their 2022 tax returns. Scroll down to the Tax-exempt interest subsection. If you disposed of the obligation or acquired it from another. Below this subtotal, print “ABP Adjustment,” and the total interest you received. You file Form 8888 with your tax return and complete Part 2 to. Below this subtotal, print “ABP Adjustment,” and the total interest you received. A new box 13 has been added to Form 1099-INT to report bond premium on tax-exempt bonds. Bond premium on Tax-Exempt Bond. 10-2019). 150-1(b) defines a governmental bond as any bond of an issue of tax-exempt bonds in which none of the bonds are private activity bonds. tax-exempt bonds). The bonds mature at par so the total premium paid is $7,485 ($107,485-$100,000. Other Information. 25% equals 4. This amount is included in line 8. Instead the amortization amount is just showing in the 1099 in the "Adjustments" section, under "Bond premium - Tax-exempt obligations (noncovered lots)", but it. (3) Cross reference. A premium bond is one in which the market price of the bond is higher than the face value. 17 . Tax-exempt interest $500, $100 of which is attributable to accrued interest. Here's where the fun begins. Also, if you acquired a tax-exempt OID bond at an acquisition premium, only report the net amount of tax-exempt OID on line 2a of your Form 1040 or 1040-SR (that is, the excess of the tax-exempt OID for the year over the amortized acquisition premium for. 744 & 745) E E Production Credit Associations E E Puerto Rico E E Puerto Rico Water Resources — 4. When bonds are purchased at a premium (greater than $1,000 per bond), a prorated portion of the amount over par can be deducted annually on the purchaser's tax return. Treasury obligation and is exempt from state and local income taxes. The second de minimis rule is the De Minimis Market Discount Rule, which only indirectly applies to OID bonds, but has significant effects, particularlyReporting interest and bond premium. First, the code declares that the amortizable bond premium deduction cannot be taken for tax-exempt bonds. Straight line or constant yield. Go to Screen 46, Elections. BOND ORIGINALLY ISSUED AT A PREMIUM HELD TO MATURITY (023015K58) ISSUER: CITY A Coupon: 2. 6045-1(a)(15)(i)(C) to determine if a debt instrument is a covered security. 15 State 16 State identification number 17 State tax withheld FATCA filing requirement . Ordinary Dividends - Select New and enter the details. Municipal bonds are typically issued with an optional redemption date or “call date” (i. My interest income is $0. However, TurboTax will carry your entry from Box 11 in the Dividends on 1099-DIV section to this line automatically. State identification no. The interest payments on the bond are qualified stated interest. In addition, the rules vary depending on the issuer of the bond (taxable bonds vs. For a covered security acquired with bond premium, you must report the amount of bond premium amortization for the tax year. Below this subtotal, print “ABP Adjustment,” and the total interest you received. Several TurboTax users have noted that TurboTax claims that Charles Schwab 1099-OID’s for tax-exempt bonds with a positive bond premium in Box 10 must have Box 10 manually reduced to 0 because Schwab provides no Box 2 value and it is treated as being null (0). Yes, we have an entry in Box 10 and Box 11. I can't do a manual adjustment as I'm doing a standard deduction, not itemized deduction. , prepayment date without penalty) approximately 10-years from the date of issuance. 33 of accrued interest you collected on the date of sale, for total tax-exempt interest income of $711. When I enter them on page#11 on the same 1099 input form they net against each other on the 1040 line 2a and do not show up on schedule B or in any detail. You can leave that field blank if Box 14 is empty on your form. Expenses (other than interest expense) connected with federally tax-exempt income that is taxable to New York State: X: X: X: X: S-204: Amortizable bond premiums on bonds that generate federally tax-exempt interest income that is taxable to New York State: X: X: X: X: S-205: Wage and salary expenses allowed as federal credits but not as federal. Bond issue. box 2 is tax-exempt interest and is not included in interest income on your tax return. State. Therefore, a tax-exempt bond purchased at a premium and held to maturity may result in no capital loss at maturity, because the basis will have been adjusted down to the bond’s face value. However, if the. Amortization Methods for Premium Bonds. Commissioner of Revenue. Based on the remaining payment schedule of the bond and A's basis in the bond, A's yield is 8. Page 3 of 8 * This is important tax information and is being furnished to the Internal Revenue Service. However, in the. 00 7- Foreign country or US possession: 6- Foreign tax paid: 0. Enter the total on line 2a of your Form 1040 or 1040-SR. Analyze the Fund American Funds Short-Term Tax-Exempt Bond Fund ® Class F-1 having Symbol FSTTX for type mutual-funds and perform research on other mutual funds. Box 11 should report the bond premium that was allocated to the interest paid during the tax year. 4- Federal income tax withheld 0. The 2017 tax law increased the phase-out thresholds for AMT meaning fewer filers will be subject to AMT under the new tax laws. 11 If tax-exempt Bonds are held to maturity and their principal repaid in full, the Bond holder generally. Report the bond’s interest on Schedule B ( Form 1040A or 1040 ), line 1. From the Main Menu of the Form 1041 select: Income. See the instructions above for a tax-exempt covered security acquired at a premium. 42%. Amortizable bond premium is a tax term referring to the excess premium paid over and above the face value of a bond. See Publication 1212 if this applies for instructions on how to calculate the taxable portion. 00 11- Specified private activity bond interest dividends (AMT) 0. I also have the same issue with my 1099-INT where my bond premium (box 11) is greater than interest income (box 1). In box 11, Bond Premium, put the amount. ) Loans of $10,000 or less between individuals who are not in the. 67. BOND ORIGINALLY ISSUED AT A PREMIUM SOLD BEFORE MATURITY Issuer: City C Coupon: 2. To properly enter this and resolve the diagnostic, net the amount of Municipal Bond interest by subtracting $100 from the $500 total and entering $400 in the applicable Municipal bond input field. 00 Market discount (noncovered lots) 0. If tax. This is because investors want a. State tax withheld $ $ 2021. Both will achieve the same result. 1-2022). If you are required to file a return, a negligence penalty or other sanction may be imposed on you if this income is taxable and the IRS determines. The following includes answers to common questions about interest, dividends, and tax-exempt income. ) The federal tax laws allow DED to allocate an annual amount established by formula in tax-exempt bond authority for industrial development, first-time farmers, student. S Bond Interest . This amortized amount is not deductible in determining taxable income. with adjustments proper to reflect unamortized bond premium, with respect to the bond, for the period before the date as of which subsection (a) becomes applicable with respect to the taxpayer with respect to such bond. 1099-INT (Rev. Fidelity Tax-Exempt Money Market Fund (FDEXX) has a seven-day yield of 2. 25% of permissible premium). California does not tax: Interest on governmental obligations. One section of the tax rules pertaining to hedge bonds provides that to avoid a bond becoming a hedge bond, an issuer must. 171–2, if a bond premium election were in effect for the prior taxable years, C would have amortized $3,257. o It is also possible that a bond that was issued with OID is later bought at a premium. 15 State 16 State identification number 17 State tax withheld FATCA filing requirement . 3. 31% (0% in CA, CT, NY) Fidelity Treasury Money Market Fund (FZFXX) 0. Market discount on a tax-exempt bond is not tax exempt. For a specified private activity bond with OID, report the tax-exempt OID in box 11 on Form 1099-OID and the tax-exempt stated interest in boxes 8 and 9 on Form 1099. 000% Dated Date: 8/31/20 Maturity Date: 4/01/27 Issue Yield/Price: 0. However, each year you must reduce your basis in the bond (and t ax-exempt interest otherwise reportable on Form 1040, line 8b) by the amortization for the year using the constant yield method. Importing financial institution data into Lacerte with Tax Import. However, each year you must reduce your basis in the bond (and tax-exempt interest otherwise reportable on Form 1040, line 8b) by the amortization for the year. U. 03-06-2023, 09:01 PM. It is possible to acquire an OID bond in the secondary market at a premium. Premium Bond: A premium bond is a bond trading above its par value ; a bond trades at a premium when it offers a coupon rate higher than prevailing interest rates. 50 with respect to bonds G and H. For an overview of an issuer’s responsibilities in a conduit financing arrangement, see IRS Publication 5005,Your Responsibilities as a Conduit Issuer of Tax-Exempt Bonds. However, each year you must reduce your basis in the bond (and tax-exempt interest otherwise reportable on Form 1040, line 8b) by the amortization for the year. Amortization Interest Income Subject to NY Tax . ”. Box 14: Tax-exempt and tax credit bond CUSIP. Complete this screen as if your Tax-Exempt Dividend Income was reported in Box 8 of a 1099-INT. IRC § 103 does not mention governmental bonds, but it does refer to. Tax-exempt bond. Higher coupons deliver more of the return sooner. In TaxSlayer Pro, don't enter. (iii) Bond issuance. Under your last entry on line 1, put a subtotal of all interest listed on line 1. Till recently the taxable account and Roths had all stocks and the tax deferred had almost all bonds and a small amount of stock index funds. (3) Bonds the interest on which is partially excludable. • Nongovernmental output property bonds. When you purchase a bond or note at a discount, you'll get Form 1099-OID (Original Issue Discount). 00 8- Cash liquidation distributions 0. 15 . I. Tax-Exempt OID (Box 11) is offset by Acq Premium (Box 6); they are both adjustments to tax exempt income and are not taxable. Clarifications would be appreciated, if I am doing this wrong. Municipal bonds have a face value. Box 3 - Early withdrawal penalty. 171–1, the amount of bond premium is $10,000 ($110,000−$100,000). Your yield is 8. Interest derived from bonds issued by California or its political subdivisions, the federal government, the District of Columbia (issued before December 24, 1973), or territories of the United States. Tax-exempt state and local government bonds. Capital Group veteran municipal manager Chad Rach will transition out of American Funds Tax-Exempt Bond on Oct. Box 11. Fidelity Learn. 00 per bond1 (also known as par). 00 9- Noncash liquidation distributions 0. The interest income from taxable bonds is subject to federal, state (and local, if applicable) income taxes. following rules shall apply to the amortizable bond premium (determined under subsection (b)) on the bond: (1) Taxable bonds. Follow these steps to report amounts from Form 1099-OID. Bond Premium on Tax-Exempt Bond. Since rates appear to be plateauing, longer-term funds might be better located in bond funds with longer durations. Personal Income Tax Massachusetts General Laws exempts from income taxation interest on obligations of the Commonwealth of Massachusetts, its political subdivisions, and agencies or instrumentalities of the Commonwealth and its subdivisions. When sold for more of the face value, they are sold with a premium; when less than face value, a discount. (b)(1)(B). Level 3. This amount is included in line 8. You must complete your federal tax return, Form 1040/1040-SR, through the federal adjusted gross income (AGI) line before. I have a form 1099-INT that lists tax exempt interest on line 8 and bond premium on tax exempt bonds on line 13. 8 Tax-exempt. Therefore, the amount of bond issuance premium is $10,000 ($110,000−$100,000). It is a municipal bond that matured and the premium was more than tax exempt amount. Amortization of bond premium attributable to current tax year on any bond whose interest income is subject to New York income tax, but exempt from federal income tax, if this amortization was not deducted on your federal return or shown as a New York subtraction. Municipal Bond Acquisition Premium. The amortization is calculated by: First, calculate the bond premium by subtracting the face value of the bond from what you paid for it. PHONE: 800-955-2444 CONNECT: Tax Analysts is a tax publisher and does not provide tax advice or preparation services. 2 of Notice 2010. Boxes 12 - 14 show state. Actually, there is not a deduction for the premium you paid for your tax-exempt bonds on your federal return. If the taxpayer decides that it is still needed, use the Total municipal bonds and Amortizable bond premium on tax-exempt bonds fields in the Tax Exempt Interest section of Screen 11 to add box 6 and box 11. Clarifications would be appreciated, if I am doing this wrong. Premium. A. If the amount of your bond premium amortization for an accrual period is more than the qualified stated interest for the period, you can deduct the difference as a. Box 13 – 15. Sixty percent of any gains will be taxed at a long-term capital gains rate of 20 percent. Report the bond’s interest on Schedule B (Form 1040A or 1040), line 1. The tax rules in each of these situations can be fairly elaborate and often require an investor to make elections and keep detailed records on the bond. Fidelity Government Money Market Fund (SPAXX) 0. 82%.