Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

Freefile

Need To File My 2011 TaxesFile Taxes Online For FreeAmend Tax Return Already FiledFiling An Amended Return For 20131099xAmend TaxesStatetaxreturnFree State FilingEfile 1040xTurbotax For MilitaryWebsite Can I Efile Past Year Tax Returns2012 Free Taxes1040 Ez Tax FormsIrs Amended Tax FormIrs 2012 Tax Forms 1040ezIrs Ez FormsFree State TaxesAmended ReturnFiling ExtensionAmended Tax Return FormI Need To File My Taxes For 2011Military Tax Return CalculatorTax 1040 EzHow Do You File An Amended Tax Return2011 Federal Income Tax Forms 1040 EzElectronic 1040xTurbotax 2010 OnlineFreestatetaxesFiling/late Taxes For 2012Amended Tax Return FormsAmending A 2010 Tax ReturnH And R Block Free EditionE File My State Taxes For FreeFree State Tax FilingFile Back Taxes Online Free2012 Tax Return AmendmentHow To File An Amended Tax Return For 2013Where Can I File My State Tax Return For Free1040ez Irs GovFree Federal And State Tax Filing 2012 Online

Freefile

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

Contact My Local Office in Alabama

Face-to-face Tax Help

IRS Taxpayer Assistance Centers (TACs) are your source for personal tax help when you believe your tax issue can only be handled face-to-face. No appointment is necessary.

Keep in mind, many questions can be resolved online without waiting in line. Through IRS.gov you can:
• Set up a payment plan.
• Get a transcript of your tax return.
• Make a payment.
• Check on your refund.
• Find answers to many of your tax questions.

We are now referring all requests for tax return preparation services to other available resources. You can take advantage of free tax preparation through Free File, Free File Fillable Forms or through a volunteer site in your community. To find the nearest volunteer site location or to get more information about Free File, go to the top of the page and enter “Free Tax Help” in the Search box.

If you have a tax account issues and feel that it requires talking with someone face-to-face, visit your local TAC.

Caution:  Many of our offices are located in Federal Office Buildings. These buildings may not allow visitors to bring in cell phones with camera capabilities.

Multilingual assistance is available in every office. Hours of operation are subject to change.

Before visiting your local office click on "Services Provided" in the chart below to see what services are available. Services are limited and not all services are available at every TAC office and may vary from site to site. You can get these services on a walk-in basis.

 

City  Address  Days/Hours of Service  Telephone* 
Birmingham  801 Tom Martin Dr.
Birmingham, AL 35211 

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(205) 912-5333 
Dothan  202 W. Adams St.
Dothan, AL 36303 

Monday-Friday - 8:30 a.m.-4:30 p.m. 
(Closed for lunch 12:00 noon - 1:00 p.m.)
 

Services Provided

(334) 702-3470 
Florence  204 S. Walnut St.
Florence, AL 35630 

Monday-Friday - 8:30 a.m.-4:30 p.m.
(Closed for lunch 12:00 noon - 1:00 p.m.) 


Services Provided

(256) 764-6731 
Huntsville  5123 Research Dr. N.W.
Huntsville, AL 35805

Monday-Friday - 8:30 a.m.-4:30 p.m.
 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**

 

Services Provided

(256) 539-0642 
Mobile  1110 Montlimar Dr.
Mobile, AL 36609 

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**
 

Services Provided

(251) 341-5946 
Montgomery  1285 Carmichael Way.
Montgomery, AL 36106 

Monday-Friday - 8:30 a.m.-4:30 p.m.

 

**This office will be open until 6:00 p.m. on 4/14 & 4/15**
 

Services Provided

(334) 264-2453 

* Note: The phone numbers in the chart above are not toll-free for all locations. When you call, you will reach a recorded business message with information about office hours, locations and services provided in that office. If face-to-face assistance is not a priority for you, you may also get help with IRS letters or resolve tax account issues by phone, toll free at 1-800-829-1040 (individuals) or 1-800-829-4933 (businesses).

For information on where to file your tax return please see Where to File Addresses.
 

The Taxpayer Advocate Service: Call (205) 912-5631 in Birmingham, or 1-877-777-4778 elsewhere, or see Publication 1546, The Taxpayer Advocate Service of the IRS. For further information, see Tax Topic 104.

Partnerships

IRS and organizations all over the country are partnering to assist taxpayers. Through these partnerships, organizations are also achieving their own goals. These mutually beneficial partnerships are strengthening outreach efforts and bringing education and assistance to millions.

For more information about these programs for individuals and families, contact the Stakeholder Partnerships, Education and Communication Office at:

Internal Revenue Service
801 Tom Martin, Room 150, Stop 30
Birmingham, AL 35211

For more information about these programs for businesses, your local Stakeholder Liaison office establishes relationships with organizations representing small business and self-employed taxpayers. They provide information about the policies, practices and procedures the IRS uses to ensure compliance with the tax laws. To establish a relationship with us, use this list to find a contact in your state:

Stakeholder Liaison (SL) Phone Numbers for Organizations Representing Small Businesses and Self-employed Taxpayers.

 

Page Last Reviewed or Updated: 28-Mar-2014

The Freefile

Freefile Index A Accuracy of deposits rule, Accuracy of Deposits Rule Additional Medicare Tax, Reminders, Additional Medicare Tax withholding. Freefile , Additional Medicare Tax withholding adjustments. Freefile Adjustments, 13. Freefile Reporting Adjustments to Form 941 or Form 944 Aliens, nonresident, Withholding income taxes on the wages of nonresident alien employees. Freefile , Withholding of social security and Medicare taxes on nonresident aliens. Freefile Allocated tips, Allocated tips. Freefile Archer MSAs, Health Savings Accounts and medical savings accounts. Freefile Assistance (see Tax help) B Backup withholding, Nonpayroll Income Tax Withholding Business expenses, employee, Employee business expense reimbursements. Freefile C Calendar, Calendar Certain foreign persons treated as American employers, Foreign persons treated as American employers. Freefile Change of business address or responsible party, Change of Business Address or Responsible Party COBRA premium assistance credit, COBRA premium assistance credit. Freefile Correcting employment taxes, Correcting employment taxes. Freefile Correcting errors, (prior period adjustments) Form 941, Prior Period Adjustments D Delivery services, private, Private Delivery Services Depositing taxes Penalties, Deposit Penalties Rules, 11. Freefile Depositing Taxes Differential wage payments, Differential wage payments. Freefile E E-file, Electronic filing by reporting agents. Freefile Election worker, State and local government employers. Freefile Electronic, Electronic deposit requirement. Freefile Electronic deposit requirement, Electronic deposit requirement. Freefile Electronic Federal Tax Payment System (EFTPS), Electronic deposit requirement. Freefile Electronic filing, Electronic Filing and Payment, Electronic filing by reporting agents. Freefile Eligibility for employment, Hiring New Employees Employees defined, Employee status under common law. Freefile Employer identification number (EIN), 1. Freefile Employer Identification Number (EIN) Employer responsibilities, Paying Wages, Pensions, or Annuities F Family employees, 3. Freefile Family Employees Final return, Final return. Freefile Form 944, 12. Freefile Filing Form 941 or Form 944 Fringe benefits, Fringe benefits. Freefile FUTA tax, 14. Freefile Federal Unemployment (FUTA) Tax G Government employers, Federal Government employers. Freefile H Health insurance plans, Health insurance plans. Freefile Health Savings Accounts (HSAs), Health Savings Accounts and medical savings accounts. Freefile Hiring new employees, Hiring New Employees Household employees, Exceptions. Freefile I Income tax withholding, Income Tax Withholding, 16. Freefile How To Use the Income Tax Withholding Tables Information returns, Information Returns International social security agreements, International social security agreements. Freefile L Long-term care insurance, Health insurance plans. Freefile Lookback period, When To Deposit M Meals and lodging, Meals and lodging. Freefile Medical care, Medical care reimbursements. Freefile Medical savings accounts, Health Savings Accounts and medical savings accounts. Freefile Medicare tax, Social Security and Medicare Taxes Mileage, Per diem or other fixed allowance. Freefile Monthly deposit schedule, Monthly Deposit Schedule Moving expenses, Moving expenses. Freefile N New employees, Hiring New Employees Noncash wages, Wages not paid in money. Freefile Nonemployee compensation, Nonpayroll Income Tax Withholding P Part-time workers, Part-Time Workers Payroll period, 8. Freefile Payroll Period Penalties, Deposit Penalties, Penalties. Freefile Private delivery services, Private Delivery Services Publications (see Tax help) R Reconciling Forms W-2 and Forms 941 or 944, Reconciling Forms W-2, W-3, and 941 or 944. Freefile Recordkeeping, Recordkeeping Reimbursements, Accountable plan. Freefile , Nonaccountable plan. Freefile , Per diem or other fixed allowance. Freefile Repayments, wages, Wage Repayments S Seasonal employers, Exceptions. Freefile Semiweekly deposit schedule, Semiweekly Deposit Schedule Sick pay, Sick pay. Freefile Social security and Medicare taxes, Social Security and Medicare Taxes Social security number, employee, 4. Freefile Employee's Social Security Number (SSN) Spouse, Business Owned and Operated by Spouses Standard mileage rate, Per diem or other fixed allowance. Freefile Statutory employees, Employee status under common law. Freefile Statutory nonemployees, Statutory employees. Freefile Successor employer, Successor employer. Freefile , Successor employer. Freefile Supplemental wages, 7. Freefile Supplemental Wages T Tax help, How To Get Tax Help Telephone help, Telephone Help Third-party sick pay tax adjustment, Adjustment of tax on third-party sick pay. Freefile Tip Rate Determination Agreement, Tip Rate Determination and Education Program. Freefile Tip Rate Determination and Education Program, Tip Rate Determination and Education Program. Freefile Tips, 6. Freefile Tips, Tips treated as supplemental wages. Freefile Trust fund recovery penalty, Trust fund recovery penalty. Freefile TTY/TDD information, How To Get Tax Help U Unemployment tax, federal, 14. Freefile Federal Unemployment (FUTA) Tax V Vacation pay, Vacation pay. Freefile W Wage repayments, Wage Repayments Wages defined, 5. Freefile Wages and Other Compensation Wages not paid in money, Wages not paid in money. Freefile Withholding Backup, Nonpayroll Income Tax Withholding Certificate, Using Form W-4 to figure withholding. Freefile Exemption, Exemption from federal income tax withholding. Freefile Fringe benefits, Withholding on fringe benefits. Freefile Income tax, Income Tax Withholding Levies, Amounts exempt from levy on wages, salary, and other income. Freefile Nonresident aliens, Withholding of social security and Medicare taxes on nonresident aliens. Freefile Pensions and annuities, Nonpayroll Income Tax Withholding Percentage method, Percentage Method Social security and Medicare taxes, Social Security and Medicare Taxes Table instructions, 16. Freefile How To Use the Income Tax Withholding Tables Tips, Tips treated as supplemental wages. Freefile Wage bracket method, Wage Bracket Method Z Zero wage return, Paying Wages, Pensions, or Annuities Prev  Up     Home   More Online Publications