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Tax question - Form 1099, Line 8 Tax Exempt Interest

Tax question - Form 1099...
Tax question - Form 1099 , Line 8 Tax Exempt Interest reflects $500; OID 1099 is 0. Under heading Detail for tax exempt interest it says tax exempt interest is $300. Under Detail for Tax Exempt OID it says OID is $200 so I guess (300+200 = 500 total tax exempt) Do I just pick up $500 tax exempt? What do I do with $200?
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Answered in 1 hour by:
8/30/2017
Chad CFP ®
Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
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Hello my name is ***** ***** I will be able to assist you with your 1099 and Original issue discount question

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Original issue discount (OID) is a form of interest on a debt instrument such as a bond or note issued at less than its face amount. The discount is considered additional interest income.

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Essentially, you have two forms of income from a debt instrument being reported to you.

The first is the interest payment. The second, is the increase in value of the debt instrument (bond for example) towards the face value at maturity.

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You would report the income on your taxes as stated on the 1099 and from what you have shared, yes, you have received $500 of tax free interest. However, you still need to report the income for alternative minimum tax and other reasons

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I would be happy to expand my answer if you have any further questions.

If you have NO further questions please accept my answer.

Thank you!

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Do you have any further questions?

Chad CFP ®
Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 767
Experience: Managing Director
Verified
Chad CFP ® and 87 other Tax Specialists are ready to help you
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Customer reply replied 2 months ago
Thank youIs the $200 reported in the detail of Tax Exempt OID considered AMT ? It wasn't reported on 1099INT as AMT

The $200 may(and most likely will be ) used to determine if you owe any alternative minimum tax. There are some municipal bond funds (depending on what the issuing municipality uses the bond revenue for) which aren't used for AMT purposes, but odds are you will have to add the tax free interest earned back to into your AGI when computing AMT.

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To clarify, the interest earned from some municipal bond funds aren't included in computing AMT. You may own a bond fund not subject to AMT. If you have previously had to pay AMT, then it would make sense to own a bond not subject to AMT, which would explain why the amount isn't reported on the 1099INT

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Chad CFP ®
Chad CFP ®
Chad CFP ®, CERTIFIED FINANCIAL PLANNER TM, Professional
Category: Tax
Satisfied Customers: 767
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