HH Savings Bonds & 1040 Line 8b exempt

Received a 1099-int for our HH Savings Bond yearly interest of $200. I entered this into TurboTax Box 3 on the Schedule B smart worksheet.... but it "appears" to be included as normal interest and nothing like I expected - to be shown on 1040 Line 8b as exempt interest ?

Reply to
P.Schuman
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I don't know much about Series HH bonds never having owned one so take the following for what it might be worth. I wonder if you think they're tax exempt from the Feds? Usually, for example, Series EE aren't unless used for some specific purposes (like higher education with some other caveats I believe). You sure this is not it? (Probably exempt from state and local, but I would bet they are not exempt from Federal taxes)

Reply to
Andrew

No, HH Bonds are "Treasury Interest" which is taxable for Federal and Exempt for State.

Rick

Reply to
PortStG

Generally (with many exceptions probably not pertinent here):

Interest on federal obligations is taxable on the federal return, but exempt from taxation by the states.

Interest on municipal obligations is not taxable on the federal return; treatment by the states varies greatly.

The federal exemption (Sec. 103 of the Internal Revenue Code) is not just generosity on the part of Congress, and it is not primarily for the benefit of the individual or other recipient of the interest. Such interest on "the obligations of a State, a Territory, or a possession of the United States, or any political subdivision of any of the foregoing, or of the District of Columbia..." (as it read before 2006) is excluded from the definition of Gross Income so as not to burden the state or subdivision, such as a city, county, school district or other special district. If the municipality had to issue only taxable bonds, then it would have to pay a higher interest rate to compete with corporate bonds, and it would have to tax its citizens more heavily to pay the higher interest. So the tax relief is intended for the state or municipality and its citizens; the recipient of the interest payments is only an incidental beneficiary.

In your specific case, I'd say that TurboTax got it right.

But remember, I've been retired a long time. I didn't even know about the recent amendment to Sec. 103 until I looked it up online today

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So be sure to check with your own CPA. RC

Reply to
R. C. White

This is not a Tax newsgroup. Most of your comments lately are directed towards tax. Perhaps you should look there for your answer.

Reply to
Oilcan

Actually, Oilcan, he did post exactly the same question in the moderated tax group as well, but since this could perhaps be reasonably be interpreted as a TurboTax issue (assuming one understood the underlying tax issue and was thinking it might be a bug in the program), I'd give him a pass here.

Reply to
Andrew

Reply to
Oilcan

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