How Can I Enter Form 1099-INT - Interest Income in ProWeb?
Interest from a business or trade is reported on Form 1099-INT. Information for covered or non covered transactions may be different for interests that are connected to transactions of securities:
- For covered securities purchased at a discount or premium, either the net interest amount or the market discount and premium amortization amounts must be reported by the payer on Form 1099-INT unless there were some notices sent by the investor to the payer.
- For non covered securities, the payer is not responsible for providing information to the taxpayer concerning any premium or discount. It is upon the taxpayer to account for those amounts.
Box 1 - Interest Income. Reported as an interest subject to tax on the tax return.
Box 2 Early Withdrawal Penalty. This stands for every interest or principal that the investor/taxpayer forfeits when they withdraw the money prior to its maturity date. This amount may be deducted from the taxpayer’s income as an adjustment on Schedule 1 (Form 1040 or 1040-NR).
Box 3 Interest Income on U.S Savings Bonds and Treasury Obligations. This is reported as an interest subject to tax on the federal return. However, it is normally not to be taxed at both the state and local level. It may be omitted from income on the state return. Some interests from Savings Bond utilized for educational expenses are not reported as interest subject to tax. Check out Form 8815 and its instructions.
Box 4 Federal Tax Withholdings. This includes backup withholdings that were withheld from the paid interest.
Box 5 Investment Expenses. Displays the share of the taxpayer of any investment expenses that are from a single class REMIC. The amount is incorporated in Box 1 and is only for informational purposes. These expenses used to be deducted as itemized deductions, subject to 2% AGI limitation before the Tax Cuts and Jobs Act of 2017. From 2018, things changed and these expenses were no longer being deducted as itemized deductions.
Box 6 Foreign Tax Paid from the paid interest on the investment. This amount may be claimed as a foreign tax credit on Form 1116 or Schedule A (Form 1040) as an itemized deduction.
Box 7 Foreign Country or U.S. Possession displays the country or U.S possession where the report for the foreign tax in Box 6 was paid.
Box 8 Tax-Exempt Interest displays the tax exempt interest that was paid. This is reported on Line 2a of Form 1040. Subtract the amount in Box 13 from this amount in order to reduce it, but not to below zero.
Box 9 Specified Private Activity Bond Interest. This is incorporated in Box 8. It is however subject to the Alternative Minimum Tax. It is included on Form 6215. Check out Form 6215 instructions for additional information.
Box 10 Market Discount. For Covered securities, it displays the market discount gained on the debt instrument during the year. (Market Discount is a result of acquiring a covered security at a cost less than the face value of a bond and the mentioned redemption price of a bond when it matures is more than the basis in the bond when it is acquired.) This amount is included in Box 1 interest reported on Schedule B (Form 1040). Market Discount on a Tax exempt security is added to taxable interest income.
Box 11 Bond Premium. For covered securities, it shows the year's bond Premium amount. Bond Premium is a result of acquiring a covered security at an amount that is greater than the face value of the bond as well as the stated redemption price of the bond when it matures is less than the basis in the bond at the moment it was acquired. This amount is notated as "ABP Adjustments" on Schedule B. It reduces the interest subject to tax.
Box 12 Bond Premium on U.S Treasury Obligation. This displays the bond Premium for the year that is for covered U.S Treasury securities. This amount reduces the interest subject to tax and is notated as "ABP Adjustment" on Schedule B.
Box 13 Bond Premium on Tax-Exempt Bond. Displays the bond premium belonging to the year for covered non taxable securities. In the Taxx Savage ProWeb, net this amount against that in Box 8 and not here. Any amount in Box 13 that is more than that in Box 8 is regarded as a non deductible loss.
Box 14 is not entered anywhere. It is for informational purposes only.
Boxes 15 - 17 display the state withholding information connected to the income.
Reporting the interest on Schedule B depends on the source as well as amount of the interest income. Check out the Schedule B instructions to know whether Schedule B is needed for the tax return being prepared.
To enter Form 1099-INT on Schedule B in ProWeb:
- Go to the Federal Section of a tax return
- Proceed to the Income section
- Select Form 1099-INT, DIV, OID
- Then go to Interest or Dividend Income
- Select Interest Income, Form 1099-INT - click on the button then Continue
- Enter the Name of the Payer (the EIN and Address are not mandatory)
- For MFJ returns, show the owner(s) of the form.
- Enter the amounts on the form in the required fields. Federal amounts in Box 3 that are exempted from tax for state purposes ought to be included on the field provided for the subtraction from the resident state return.
Note: This is not tax advice. It is a guide on how to enter Form 1099-INT into the Taxx Savage ProWeb.
Additional Information:
IRS: Instructions for Forms 1099-INT and 1099-OID