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Lines 2a/2b: If you received tax-exempt interest from an asset, such as from a municipal bond, enter it on this line using the payer’s 1099-INT or 1099-OID form that you received. If the total ...
Taxpayers earning more than $1,500 in interest or ordinary dividends must also fill out Schedule B (Form 1040). What accounts and investments aren’t subject to tax on interest income?
In the United States income tax system, adjusted gross income (AGI) is an individual's total gross income minus specific deductions. [1] It is used to calculate taxable income, which is AGI minus allowances for personal exemptions and itemized deductions. For most individual tax purposes, AGI is more relevant than gross income.
Certain types of income are exempt from income tax. Among the more common types of exempt income are interest on municipal bonds, a portion of Social Security benefits, life insurance proceeds, gifts or inheritances, and the value of many employee benefits. Gross income is reduced by adjustments and deductions.
Interest earned on I bonds is tax-exempt if you use the interest for qualified educational purchases. Otherwise the interest earned is taxable on federal income taxes. Otherwise the interest ...
In effect, selling a bond at a discount converts stated principal into a return on investment, or interest. The accurate determination of principal and interest is necessary in United States tax law to determine the basis of property and to determine whether an amount paid is deductible and includible as interest, or simply a nontaxable debt ...