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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Someone I know has a Tax Free Municpal bond that they earn

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Someone I know has a Tax Free Municpal bond that they earn a monthy dividend off of. This person has been getting these payments for a few years, but has NOT reported it on her tax returns. It's through Franklin Templeton. I looked the fund up and it confirms it's a tax free bond. Is there ever an instance where you do not have to report income on a federal tax return?

Megan C :

Thank you for your question, and thanks for using JustAnswer.com

Megan C :

How are you today?

Customer:

I'm awesome, how are you.

Megan C :

Good. Even though the interest off a muni bond is tax exempt, you still put the interest on line 8b of your tax return

Megan C :

It does not go into your taxable income

Megan C :

but it alerts the IRS that you do have tax free income

Customer:

It was a dividend, sorry. Does that matter?

Megan C :

No, it's still not taxable

Megan C :

You would still place on line 8b

Megan C :

But still, not taxable

Customer:

I didn't think there was ever an instance you could avoid listing any type of income on a 1040. But she hasn't filed anything for three years in that regards (she still files, just doesn't report that income).

Customer:

Thank you tho. :)

Megan C :

You're welcome

Megan C :

Is there anything else I can help you with today?

Customer:

Nope. :)

Customer:

Thanks a bunch

Megan C and 2 other Finance Specialists are ready to help you
Thanks, Clyde for your positive rating. Please come back and visit me any time you need a tax, finance, or social security question answered. It was a pleasure working with you today!