Schedule B Interest Question

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
xenial
Posts: 2593
Joined: Tue Feb 27, 2007 1:36 am
Location: USA

Schedule B Interest Question

Post by xenial » Mon Feb 12, 2018 7:09 pm

If boxes 1 & 3 both contain positive values on the 1099-INT from a particular payer, is it acceptable to report the sum of these amounts on a single line of Schedule B Part I?

clydewolf
Posts: 686
Joined: Tue Jul 21, 2015 12:51 pm

Re: Schedule B Interest Question

Post by clydewolf » Mon Feb 12, 2018 7:16 pm

Box 3 is exempted from State Income tax.

For your federal return it will not matter.

xenial
Posts: 2593
Joined: Tue Feb 27, 2007 1:36 am
Location: USA

Re: Schedule B Interest Question

Post by xenial » Mon Feb 12, 2018 7:19 pm

clydewolf wrote:
Mon Feb 12, 2018 7:16 pm
Box 3 is exempted from State Income tax.

For your federal return it will not matter.
I understand. So the two amounts are to be combined on the same line, as opposed to being reported on separate lines?

User avatar
CAsage
Posts: 931
Joined: Sun Mar 27, 2016 6:25 pm

Re: Schedule B Interest Question

Post by CAsage » Mon Feb 12, 2018 7:22 pm

I think you just put the exact amounts from Lines 1 & 3 in the separate boxes on the worksheet (if you are using software). Do not add them, as the single amount should be the amount you actually earned/received/is taxable. Make sense? Don't double your burden! If the amounts are different, it will carry down to your state tax return.... But do not add them together; they are duplicative.
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.

xenial
Posts: 2593
Joined: Tue Feb 27, 2007 1:36 am
Location: USA

Re: Schedule B Interest Question

Post by xenial » Mon Feb 12, 2018 7:27 pm

CAsage wrote:
Mon Feb 12, 2018 7:22 pm
I think you just put the exact amounts from Lines 1 & 3 in the separate boxes on the worksheet (if you are using software). Do not add them, as the single amount should be the amount you actually earned/received/is taxable. Make sense? Don't double your burden! If the amounts are different, it will carry down to your state tax return.... But do not add them together; they are duplicative.
I'm not using software. I'm using Free File Fillable Forms, which is basically the same as paper forms.

It makes sense to me that I should report the sum on one line. My concern is with the IRS computers flagging my return if the exact values from the 1099-INT boxes don't appear on Schedule B.

User avatar
AAA
Posts: 947
Joined: Sat Jan 12, 2008 8:56 am

Re: Schedule B Interest Question

Post by AAA » Mon Feb 12, 2018 8:02 pm

CAsage wrote:
Mon Feb 12, 2018 7:22 pm
But do not add them together; they are duplicative.
They don't appear to be duplicative. From IRS instructions for 1099-INT:

Box 1. Shows taxable interest paid to you during the calendar year by the payer. This does not include interest shown in box 3.,,

Box 3. Shows interest on U.S. Savings Bonds, Treasury bills, Treasury bonds, and Treasury notes. This may or may not all be taxable. See Pub. 550. This interest is exempt from state and local income taxes. This interest is not included in box 1...

xenial
Posts: 2593
Joined: Tue Feb 27, 2007 1:36 am
Location: USA

Re: Schedule B Interest Question

Post by xenial » Mon Feb 12, 2018 9:22 pm

Maybe I'm being dense, but I don't think anyone's addressed my question.

Let's say Box 1 contains a value of $200, and Box 3 contains a value of $100.
Do I make a single $300 entry on Schedule B for the payer, or do I make one $100 entry and one $200 entry, or does it not matter?

User avatar
FiveK
Posts: 4667
Joined: Sun Mar 16, 2014 2:43 pm

Re: Schedule B Interest Question

Post by FiveK » Mon Feb 12, 2018 9:48 pm

xenial wrote:
Mon Feb 12, 2018 9:22 pm
Maybe I'm being dense, but I don't think anyone's addressed my question.

Let's say Box 1 contains a value of $200, and Box 3 contains a value of $100.
Do I make a single $300 entry on Schedule B for the payer, or do I make one $100 entry and one $200 entry, or does it not matter?
$300, because Report on line 1 all of your taxable interest.

kaneohe
Posts: 4707
Joined: Mon Sep 22, 2008 12:38 pm

Re: Schedule B Interest Question

Post by kaneohe » Mon Feb 12, 2018 10:03 pm

Either way is fine. IRS is only concerned w/ the total. Might to useful tho to list as separate items to remind you that they are treated differently for state.

xenial
Posts: 2593
Joined: Tue Feb 27, 2007 1:36 am
Location: USA

Re: Schedule B Interest Question

Post by xenial » Mon Feb 12, 2018 10:30 pm

FiveK and kaneohe, thanks!
kaneohe wrote:
Mon Feb 12, 2018 10:03 pm
Either way is fine. IRS is only concerned w/ the total. Might to useful tho to list as separate items to remind you that they are treated differently for state.
If the IRS is only concerned with the total, what happens when you include a negative entry for accrued interest, which doesn't appear anywhere on 1099-INT, and then file electronically? I use Free File Fillable Forms, and I prefer not to receive love notes from the IRS. :)

User avatar
Epsilon Delta
Posts: 7335
Joined: Thu Apr 28, 2011 7:00 pm

Re: Schedule B Interest Question

Post by Epsilon Delta » Mon Feb 12, 2018 11:50 pm

FiveK wrote:
Mon Feb 12, 2018 9:48 pm
xenial wrote:
Mon Feb 12, 2018 9:22 pm
Maybe I'm being dense, but I don't think anyone's addressed my question.

Let's say Box 1 contains a value of $200, and Box 3 contains a value of $100.
Do I make a single $300 entry on Schedule B for the payer, or do I make one $100 entry and one $200 entry, or does it not matter?
$300, because Report on line 1 all of your taxable interest.
I don't think that's determinative. The fourteen lines above line 2 are all line 1 (as are the attached statements if you need more than 14). So either one entry of $300 or two entries of totaling $300 satisfy the instruction to report all of the income on line 1.

it may or may not be related that some years ago the IRS prohibited brokerages from providing a total on a 1099-DIV because on line 5 the IRS wanted taxpayers to put individual fund distributions such as "Vanguard Total Stock Market Index $500; Vanguard Treasury MM $100" and not a single total "Vanguard $600"

User avatar
FiveK
Posts: 4667
Joined: Sun Mar 16, 2014 2:43 pm

Re: Schedule B Interest Question

Post by FiveK » Tue Feb 13, 2018 12:10 am

Epsilon Delta wrote:
Mon Feb 12, 2018 11:50 pm
FiveK wrote:
Mon Feb 12, 2018 9:48 pm
$300, because Report on line 1 all of your taxable interest.
I don't think that's determinative.
Agreed, it's not. But it is the simplest correct way.

kaneohe
Posts: 4707
Joined: Mon Sep 22, 2008 12:38 pm

Re: Schedule B Interest Question

Post by kaneohe » Tue Feb 13, 2018 1:43 am

xenial wrote:
Mon Feb 12, 2018 10:30 pm
FiveK and kaneohe, thanks!
kaneohe wrote:
Mon Feb 12, 2018 10:03 pm
Either way is fine. IRS is only concerned w/ the total. Might to useful tho to list as separate items to remind you that they are treated differently for state.
If the IRS is only concerned with the total, what happens when you include a negative entry for accrued interest, which doesn't appear anywhere on 1099-INT, and then file electronically? I use Free File Fillable Forms, and I prefer not to receive love notes from the IRS. :)
If you have room to provide details, it is probably better to enter such details separately. They will hopefully be more self explanatory and minimize the love notes.........tho if you have a good explanation, no reason to fear the love notes. My experience mostly is combining several funds on a single line of the dividend part of Sch B. I also provide the individual numbers/names so I can trace where the subtotals come from but I suspect that IRS just looks at the total of all of the entries. In any case, no love notes ......so far.

FactualFran
Posts: 616
Joined: Sat Feb 21, 2015 2:29 pm

Re: Schedule B Interest Question

Post by FactualFran » Tue Feb 13, 2018 3:38 pm

According to the instructions for Schedule B:
You can list more than one payer on each entry space for lines 1 and 5, but be sure to clearly show the amount paid next to each payer's name. Add the separate amounts paid by the payers listed on an entry space and enter the total in the “Amount” column.
However, 1099 statements I have received for a Vanguard mutual funds account (not a Vanguard brokerage account) contains: "Please Note: Each specific fund name, NOT Vanguard, must be reported along with the related tax information on Form 1040 Schedule(s) B and D."

It appears that with a brokerage account, the brokerage is the payer, while with mutual funds that are directly purchased from the fund, each mutual fund is a separate payer.

Later addition: On the 2017 1099 statement for a Vanguard mutual funds account that I have, each fund has its own "PAYER'S federal identification number". On the 2017 1099 statement for a (non-Vanguard) brokerage account that I have, at the top of each page there is a "Payer's Fed ID Number" that is the same on every page. The investments in the brokerage account do not have a Fed ID Number.

annielouise
Posts: 206
Joined: Wed May 14, 2008 4:11 pm

Re: Schedule B Interest Question

Post by annielouise » Tue Feb 13, 2018 4:13 pm

I would list:

Bank X $200
Bank X, US Savings Bonds $100

That's what we were taught years ago in tax school.

Post Reply