Reporting tax-exempt interest incorrectly
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I just found out for years 2013, 2014 and 2015 I entered tax-exempt interest incorrectly on Form 1040 ( from Schedule B ) while it was reported (calculated) correctly on Schedule B. This interest had no effect on the amount of tax I owed to IRS for those years. Should I ignore or file amendments?
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@richard This answer is worth exactly what you’re paying for it, and is predicated on two things:
- You have not had a long, drawn out fight with the IRS, and
- There is nothing else wrong with your 2013 - 15 forms.
File amended returns.
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You report tax-exempt interest on Line 8b of Form 1040. You don’t report it on Schedule B at all.
You report any adjustments to gain or loss on bonds from Form 8949 column (g) on Schedule D column (g) and on Schedule B as Accrued Market Discount as a positive number underneath your other entries for taxable interest. You report Accrued Interest that you paid on taxable bonds as a negative number on Schedule B.
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@gwraigty said in Reporting tax-exempt interest incorrectly:
You report tax-exempt interest on Line 8b of Form 1040. You don’t report it on Schedule B at all.
You report any adjustments to gain or loss on bonds from Form 8949 column (g) on Schedule D column (g) and on Schedule B as Accrued Market Discount as a positive number underneath your other entries for taxable interest. You report Accrued Interest that you paid on taxable bonds as a negative number on Schedule B.
I had entered correct amounts on Schedule B but my spreadsheet transferred incorrect amounts to Line 8b of Form 1040 (because of an outdated incorrect formula I had entered in the cell for Line 8b of Form 1040).
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@honkinggoose said in Reporting tax-exempt interest incorrectly:
@richard This answer is worth exactly what you’re paying for it, and is predicated on two things:
- You have not had a long, drawn out fight with the IRS, and
- There is nothing else wrong with your 2013 - 15 forms.
File amended returns.
I have not received any notices/communications from IRS so far and I keep sending them big, fat checks quarterly. Amending years 2013-2015 will result in 0 additional tax benefits to me or IRS. It could only affect ATM calculations (I am not subject to) and some Modified AGI calculations (not changing my current status or rates).
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Then I probably wouldn’t bother to amend.
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I had entered correct amounts on Schedule B
So if you entered on Schedule B, didn’t you pay taxes on it?
but my spreadsheet transferred incorrect amounts to Line 8b of Form 1040 (because of an outdated incorrect formula I had entered in the cell for Line 8b of Form 1040).
Who does spreadsheet these days - get the tax software and save yourself headaches.
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@principalmember said in Reporting tax-exempt interest incorrectly:
Who does spreadsheet these days - get the tax software and save yourself headaches.
I use a spreadsheet throughout the year to make sure we’re on track to be where we want to be at the end of the year. For filing, I use the Free Fillable Forms and makes sure that both the spreadsheet and the forms agree.
After Turbo Tax messed up our taxes 2 years in a row because of errors in how they were handling company HSA contributions (a search of the boards at the time showed that everyone with an HSA was had this issue), I decided not to trust tax software anymore. Maybe short-sighted, but after doing my own taxes since back in the day when your only option was using pencil and paper forms, it feels much more natural to me than using a question/answer format in software.
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A taxpayer is under no legal obligation to file an amended return to correct an error in a previously filed return for an open year.
