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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7434
Experience:  15years with H & R Block. Divisional leader, Instructor
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What is the proper way to record taxable interest income?

Resolved Question:

What is the proper way to record taxable interest income? I have a payment series coming in. Do I record interest with each payment or after I have collected my principle back?
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Robin D :

Hello and thank you for using Just Answer,
You would record the amount of each payment that is not principle. Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. Even if little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest.

Robin D :

Your positive rating is always thanks enough.

If you could also participate in the very short survey that Just Answer will send you by e-mail I would appreciate that very much.
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Customer:

You said part of each payment 'may' be treated as interest. Is this an option or a requirement? Assuming of course that there is interest on the loan.

Robin D :

It is a requirement when I said "may" I was speaking about "imputed interest" where the IRS applies interest when not enough or any is being claimed.

Customer:

okay, sounds good. thanks for clarifying!

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7434
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 2 other Tax Specialists are ready to help you

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