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2010 1040 Tax Forms

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2010 1040 Tax Forms

2010 1040 tax forms 2. 2010 1040 tax forms   Foreclosures and Repossessions Table of Contents Amount realized and ordinary income on a recourse debt. 2010 1040 tax forms Amount realized on a nonrecourse debt. 2010 1040 tax forms If you do not make payments you owe on a loan secured by property, the lender may foreclose on the loan or repossess the property. 2010 1040 tax forms The foreclosure or repossession is treated as a sale from which you may realize gain or loss. 2010 1040 tax forms This is true even if you voluntarily return the property to the lender. 2010 1040 tax forms If the outstanding loan balance was more than the FMV of the property and the lender cancels all or part of the remaining loan balance, you also may realize ordinary income from the cancellation of debt. 2010 1040 tax forms You must report this income on your return unless certain exceptions or exclusions apply. 2010 1040 tax forms See chapter 1 for more details. 2010 1040 tax forms Borrower's gain or loss. 2010 1040 tax forms    You figure and report gain or loss from a foreclosure or repossession in the same way as gain or loss from a sale. 2010 1040 tax forms The gain is the difference between the amount realized and your adjusted basis in the transferred property (amount realized minus adjusted basis). 2010 1040 tax forms The loss is the difference between your adjusted basis in the transferred property and the amount realized (adjusted basis minus amount realized). 2010 1040 tax forms For more information on figuring gain or loss from the sale of property, see Gain or Loss From Sales and Exchanges in Publication 544. 2010 1040 tax forms You can use Table 1-1 to figure your ordinary income from the cancellation of debt and your gain or loss from a foreclosure or repossession. 2010 1040 tax forms Amount realized and ordinary income on a recourse debt. 2010 1040 tax forms    If you are personally liable for the debt, the amount realized on the foreclosure or repossession includes the smaller of: The outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, or The FMV of the transferred property. 2010 1040 tax forms The amount realized also includes any proceeds you received from the foreclosure sale. 2010 1040 tax forms If the FMV of the transferred property is less than the total outstanding debt immediately before the transfer reduced by any amount for which you remain personally liable immediately after the transfer, the difference is ordinary income from the cancellation of debt. 2010 1040 tax forms You must report this income on your return unless certain exceptions or exclusions apply. 2010 1040 tax forms See chapter 1 for more details. 2010 1040 tax forms       Example 1. 2010 1040 tax forms Tara bought a new car for $15,000. 2010 1040 tax forms She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. 2010 1040 tax forms Tara is personally liable for the loan (recourse debt) and the car is pledged as security for the loan. 2010 1040 tax forms On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. 2010 1040 tax forms The balance due after taking into account the payments Tara made was $10,000. 2010 1040 tax forms The FMV of the car when it was repossessed was $9,000. 2010 1040 tax forms On November 15, 2013, the credit company forgave the remaining $1,000 balance on the loan due to insufficient assets. 2010 1040 tax forms In this case, the amount Tara realizes is $9,000. 2010 1040 tax forms This is the smaller of: The $10,000 outstanding debt immediately before the repossession reduced by the $1,000 for which she remains personally liable immediately after the repossession ($10,000 − $1,000 = $9,000), or The $9,000 FMV of the car. 2010 1040 tax forms Tara figures her gain or loss on the repossession by comparing the $9,000 amount realized with her $15,000 adjusted basis. 2010 1040 tax forms She has a $6,000 nondeductible loss. 2010 1040 tax forms After the cancellation of the remaining balance on the loan in November, Tara also has ordinary income from cancellation of debt in the amount of $1,000 (the remaining balance on the $10,000 loan after the $9,000 amount satisfied by the FMV of the repossessed car). 2010 1040 tax forms Tara must report this $1,000 on her return unless one of the exceptions or exclusions described in chapter 1 applies. 2010 1040 tax forms Example 2. 2010 1040 tax forms Lili paid $200,000 for her home. 2010 1040 tax forms She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. 2010 1040 tax forms Lili is personally liable for the mortgage loan and the house secures the loan. 2010 1040 tax forms In 2013, the bank foreclosed on the mortgage because Lili stopped making payments. 2010 1040 tax forms When the bank foreclosed the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. 2010 1040 tax forms At the time of the foreclosure, the bank forgave $2,000 of the $10,000 debt in excess of the FMV ($180,000 minus $170,000). 2010 1040 tax forms She remained personally liable for the $8,000 balance. 2010 1040 tax forms In this case, Lili has ordinary income from the cancellation of debt in the amount of $2,000. 2010 1040 tax forms The $2,000 income from the cancellation of debt is figured by subtracting the $170,000 FMV of the house from the $172,000 difference between her total outstanding debt immediately before the transfer of property and the amount for which she remains personally liable immediately after the transfer ($180,000 minus $8,000). 2010 1040 tax forms She is able to exclude the $2,000 of canceled debt from her income under the qualified principal residence indebtedness rules discussed earlier. 2010 1040 tax forms Lili must also determine her gain or loss from the foreclosure. 2010 1040 tax forms In this case, the amount that she realizes is $170,000. 2010 1040 tax forms This is the smaller of: (a) the $180,000 outstanding debt immediately before the transfer reduced by the $8,000 for which she remains personally liable immediately after the transfer ($180,000 − $8,000 = $172,000) or (b) the $170,000 FMV of the house. 2010 1040 tax forms Lili figures her gain or loss on the foreclosure by comparing the $170,000 amount realized with her $175,000 adjusted basis. 2010 1040 tax forms She has a $5,000 nondeductible loss. 2010 1040 tax forms Table 1-1. 2010 1040 tax forms Worksheet for Foreclosures and Repossessions Part 1. 2010 1040 tax forms Complete Part 1 only if you were personally liable for the debt (even if none of the debt was canceled). 2010 1040 tax forms Otherwise, go to Part 2. 2010 1040 tax forms 1. 2010 1040 tax forms Enter the amount of outstanding debt immediately before the transfer of property reduced by any amount for which you remain personally liable immediately after the transfer of property   2. 2010 1040 tax forms Enter the fair market value of the transferred property   3. 2010 1040 tax forms Ordinary income from the cancellation of debt upon foreclosure or repossession. 2010 1040 tax forms * Subtract line 2 from line 1. 2010 1040 tax forms If less than zero, enter zero. 2010 1040 tax forms Next, go to Part 2   Part 2. 2010 1040 tax forms Gain or loss from foreclosure or repossession. 2010 1040 tax forms   4. 2010 1040 tax forms Enter the smaller of line 1 or line 2. 2010 1040 tax forms If you did not complete Part 1 (because you were not personally liable for the debt), enter the amount of outstanding debt immediately before the transfer of property   5. 2010 1040 tax forms Enter any proceeds you received from the foreclosure sale   6. 2010 1040 tax forms Add line 4 and line 5   7. 2010 1040 tax forms Enter the adjusted basis of the transferred property   8. 2010 1040 tax forms Gain or loss from foreclosure or repossession. 2010 1040 tax forms Subtract line 7 from line 6   * The income may not be taxable. 2010 1040 tax forms See chapter 1 for more details. 2010 1040 tax forms Amount realized on a nonrecourse debt. 2010 1040 tax forms    If you are not personally liable for repaying the debt secured by the transferred property, the amount you realize includes the full amount of the outstanding debt immediately before the transfer. 2010 1040 tax forms This is true even if the FMV of the property is less than the outstanding debt immediately before the transfer. 2010 1040 tax forms Example 1. 2010 1040 tax forms Tara bought a new car for $15,000. 2010 1040 tax forms She made a $2,000 downpayment and borrowed the remaining $13,000 from the dealer's credit company. 2010 1040 tax forms Tara is not personally liable for the loan (nonrecourse), but pledged the new car as security for the loan. 2010 1040 tax forms On August 1, 2013, the credit company repossessed the car because Tara had stopped making loan payments. 2010 1040 tax forms The balance due after taking into account the payments Tara made was $10,000. 2010 1040 tax forms The FMV of the car when it was repossessed was $9,000. 2010 1040 tax forms The amount Tara realized on the repossession is $10,000. 2010 1040 tax forms That is the outstanding amount of debt immediately before the repossession, even though the FMV of the car is less than $10,000. 2010 1040 tax forms Tara figures her gain or loss on the repossession by comparing the $10,000 amount realized with her $15,000 adjusted basis. 2010 1040 tax forms Tara has a $5,000 nondeductible loss. 2010 1040 tax forms Example 2. 2010 1040 tax forms Lili paid $200,000 for her home. 2010 1040 tax forms She made a $15,000 downpayment and borrowed the remaining $185,000 from a bank. 2010 1040 tax forms She is not personally liable for the loan, but grants the bank a mortgage. 2010 1040 tax forms The bank foreclosed on the mortgage because Lili stopped making payments. 2010 1040 tax forms When the bank foreclosed on the mortgage, the balance due was $180,000, the FMV of the house was $170,000, and Lili's adjusted basis was $175,000 due to a casualty loss she had deducted. 2010 1040 tax forms The amount Lili realized on the foreclosure is $180,000, the outstanding debt immediately before the foreclosure. 2010 1040 tax forms She figures her gain or loss by comparing the $180,000 amount realized with her $175,000 adjusted basis. 2010 1040 tax forms Lili has a $5,000 realized gain. 2010 1040 tax forms See Publication 523 to figure and report any taxable amount. 2010 1040 tax forms Forms 1099-A and 1099-C. 2010 1040 tax forms    A lender who acquires an interest in your property in a foreclosure or repossession should send you Form 1099-A, Acquisition or Abandonment of Secured Property, showing information you need to figure your gain or loss. 2010 1040 tax forms However, if the lender also cancels part of your debt and must file Form 1099-C, the lender can include the information about the foreclosure or repossession on that form instead of on Form 1099-A. 2010 1040 tax forms The lender must file Form 1099-C and send you a copy if the amount of debt canceled is $600 or more and the lender is a financial institution, credit union, federal government agency, or any organization that has a significant trade or business of lending money. 2010 1040 tax forms For foreclosures or repossessions occurring in 2013, these forms should be sent to you by January 31, 2014. 2010 1040 tax forms Prev  Up  Next   Home   More Online Publications
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Understanding Your LT26 Notice

You were previously asked information regarding the filing of your tax return for a specific tax period.


What you need to do

  • File the tax return to the address on the letter.
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You may want to

  • Contact our office either by phone or mail the return within 10 days of the date of this letter.
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Answers to Common Questions

Q. Based on my income I do not think I need to file?

A. Check irs.gov to see if your income is below the filing requirement, but you should still contact IRS.

Q. What if I already filed the return?

A. If it has been over 10 weeks, send a signed copy of the return again.

Q. Why are you contacting me to file the return? Am I due a refund?

A. To receive the refund, a delinquent return must be filed within three years of the original return due date, or within two years of the date of the payment, if applicable.

Q. What if I am unable to pay the full balance at the time of filing?

A. Go to irs.gov and complete Form 9464 (Installment Agreement Request) and mail with the return.

 

Page Last Reviewed or Updated: 28-Jan-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
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  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The 2010 1040 Tax Forms

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