File your Taxes for Free!
  • Get your maximum refund*
  • 100% accurate calculations guaranteed*

TurboTax Federal Free Edition - File Taxes Online

Don't let filing your taxes get you down! We'll help make it as easy as possible. With e-file and direct deposit, there's no faster way to get your refund!

Approved TurboTax Affiliate Site. TurboTax and TurboTax Online, among others, are registered trademarks and/or service marks of Intuit Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.


© 2012 - 2018 All rights reserved.

This is an Approved TurboTax Affiliate site. TurboTax and TurboTax Online, among other are registered trademarks and/or service marks of Intuit, Inc. in the United States and other countries. Other parties' trademarks or service marks are the property of the respective owners.
When discussing "Free e-file", note that state e-file is an additional fee. E-file fees do not apply to New York state returns. Prices are subject to change without notice. E-file and get your refund faster
*If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
*Maximum Refund Guarantee - or Your Money Back: If you get a larger refund or smaller tax due from another tax preparation method, we'll refund the applicable TurboTax federal and/or state purchase price paid. TurboTax Federal Free Edition customers are entitled to payment of $14.99 and a refund of your state purchase price paid. Claims must be submitted within sixty (60) days of your TurboTax filing date and no later than 6/15/14. E-file, Audit Defense, Professional Review, Refund Transfer and technical support fees are excluded. This guarantee cannot be combined with the TurboTax Satisfaction (Easy) Guarantee. *We're so confident your return will be done right, we guarantee it. Accurate calculations guaranteed. If you pay an IRS or state penalty or interest because of a TurboTax calculations error, we'll pay you the penalty and interest.
https://turbotax.intuit.com/corp/guarantees.jsp

1040ezform

Can I Efile My 2012 TaxesOnline Taxes Hrblock1040ezIrs Amended Tax Form 1040xIrs Ez Tax FormStudents Filing Taxes 2013File My 2012 Tax Return2010 Form 1040 EzFile State Taxes Free Online2013 Ez Tax FormIrs Tax Forms 2011 DownloadIrs Gov Freefile State TaxesTax Extension 20111040 Form 2012Irs Forms For 2009Free Downloadable Irs Tax FormsHow To Fill Out A 1040x AmendmentRefile Taxes 20121040 Ez 2012Can Amended Returns Be E FiledH&r Block Free 1040ez1040 State Tax FormTurbo Tax 1040nrDownload 1040ez FormFree Tax Preparation Online1040ez Instructions 2012How Do I File My 2012 Tax ReturnFile 1040ez FormH&r Block Free Online Tax ReturnWhen Can I File An Amended Tax ReturnIrs Gov Form 1040a For 2012Free H&r Block Tax1040ez Form 2012Where To File Federal Tax Return 2012State Tax ReturnsTurbo TaxFile Free Federal And State TaxesIrs Tax Forms 20111040ez Online FreeFree 2010 Tax Return

1040ezform

1040ezform Publication 584SP - Introductory Material Table of Contents Qué Hay de Nuevo Introduction Qué Hay de Nuevo Acontecimientos futuros. 1040ezform  El IRS ha diseñado una página en el Internet, www. 1040ezform irs. 1040ezform gov/pub584sp, que incluye información sobre la Publicación 584(SP). 1040ezform Toda información sobre desarrollos futuros que afecten la Publicación 584(SP) (como legislación aprobada después de que la publicación haya sido publicada) será anunciada en esta página. 1040ezform Introduction Este registro se ha creado para ayudarlo a determinar la cantidad de una pérdida ocasionada por un desastre, hecho fortuito o robo que esté relacionada con propiedad de uso personal. 1040ezform Contiene anexos para ayudarlo a calcular el valor de la pérdida de su residencia principal, de toda propiedad contenida dentro de la misma y de sus vehículos motorizados. 1040ezform Sin embargo, estos anexos sólo son para su información. 1040ezform Tiene que completar el Formulario 4684, Casualties and Thefts (Hechos Fortuitos y Robos), en inglés, para declarar su pérdida. 1040ezform Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Alternative Minimum Tax (AMT) Assistant for Individuals

Individuals with a higher income may be subject to the Alternative Minimum Tax. Under the tax law, certain tax benefits can significantly reduce a taxpayer’s regular tax amount. The AMT sets a limit on those benefits. If the tax benefits would reduce total tax below the AMT limit, the taxpayer must pay the higher Alternative Minimum Tax amount.

If you prepare your own Form 1040 tax return without using software, you may need to complete Form 6251, Alternative Minimum Tax – Individuals to determine whether you owe the AMT.  You can use the AMT Assistant before you go through preparing Form 6251 to find out if you actually need to complete it.

Should you use the AMT Assistant?
Check here first. If you received or claimed any of the following items in the tax year, you must complete Form 6251 and there is no need to use the AMT Assistant:

  • Accelerated Depreciation
  • Stock by exercising an incentive stock option and you did not dispose of the stock in the same year
  • Tax exempt interest from private activity bonds
  • Intangible drilling, circulation, research, experimental or mining costs
  • Amortization of pollution-control facilities or depletion
  • Income (or loss) from tax-shelter farm activities or passive activities
  • Income from long-term contracts not figured using the percentage-of-completion method
  • Interest paid on a home mortgage NOT used to buy, build or substantially improve your home
  • Investment interest expense reported on Form 4952
  • Net operating loss deduction
  • Alternative minimum tax adjustments from an estate, trust, electing large partnership or cooperative
  • Section 1202 exclusion
  • Any general business credit in Part I on Form 3800
  • Empowerment zone and renewal community employment credit
  • Qualified electric vehicle credit
  • Alternative fuel vehicle refueling property credit
  • Credit for prior year minimum tax

Using the AMT Assistant
Even if you did not receive or claim any of the above, you may need to complete Form 6251. You can use the AMT Assistant and quickly find out. Based on your entries the AMT Assistant results will tell you either:

  • You do not owe the AMT, or
  • You must complete Form 6251

Before You Start
Have your draft 2013 Form 1040 available, completed through Line 44 (Tax), as well as your draft Schedule A (if used). If you are claiming the foreign tax credit, you should also complete Form 1040, line 47, because you may be asked for information from that line.

Note: the AMT Assistant will ask you again about the items in the list above. Just answer “no” to confirm and continue.

Remember the answer you get is only as accurate as the data you enter!

Start the Tax Year 2013 AMT Assistant
NOTE: The "print" button on the results page is not working. Please use your Web browser's standard printing method to print your results.

Prior years still available:

Tax Year 2012 AMT Assistant

Tax Year 2011 AMT Assistant

Your entries in the AMT Assistant application are anonymous and the information will be used only for the purpose of determining your eligibility. All entries are erased when you exit or start over. See the “IRS Privacy Policy” for more information.

Page Last Reviewed or Updated: 27-Mar-2014

The 1040ezform

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