Part 1 Flashcards
Interest Income
1099-INT reported, taxable, 1099 received if INT exceeds $10, if INT > $1500 not able to file 1040EZ and should report it on schedule B
Interest on US treasury Bills Notes and Bonds
Normally taxable
Series EE bonds
Issued at the discount, most common US saving Bonds, Difference between purchase price and sale price is interest
Series I bonds
Issued at the face value maturity 30 years,. Face value and accrued int is payable at maturity.
Report income from EE and I series Bonds
When bond matures or is redeemed
Each year as redemption increases
Exclude INT earning
Taxpayer must be 24 Yo before bond issue date
Series HH bonds
issued at the face value pays INT twice a year, report i n the year it is paid
Educational Savings Bonds
Series EE and I bonds purchased at the tax free basis to pay for educational expenses; not for MFS. Qualifying educational expenses include:
1. College tuition and fees (only degree program)
2. Expenses for degree courses
3 Cost of room and board and books not eligible
Reported on 8815
Gift for opening bank account
Taxable interest
deposits 5K and more = int $20, less $10
Cash bonus to open bank account = int taxable
Interest earned on Certificate of Deposit
INT on CD is taxable when taxpayer receives it without penalty
Tax exempt interest
state and local governments (muni bonds)
Ordinary div
Corporate distr in cash out of earning and profit. Tax as orinary (unless qualified)
Non dividend distribution
paid not from E&P. It is recovery of capital not taxable . They reduce basis in stock (box 3 DIV)
Qualified DIV
Ordinary DIV with preferred tax rate as LT cap gain. To qualify:
paid in US corp or qualifying foreign corp
held sock more than 60 days in 121 days period
Mutual Fund Distributions
Cap gain treated as LT
