Interest income from Treasury bills, notes and bonds is subject to federal income tax but is exempt from all state and local income taxes. It is reported in Form 1099-INT Box 3.
Treasury Bills
These bills generally have a 4-week, 13-week, 26-week, or 52-week maturity period.
They are issued at a discount. The difference between purchase price and face value is the interest income which is included in your income when you get the payment at maturity.
Treasury notes and bonds
Treasury notes have maturity period more than 1 year, ranging up to 10 years.
Treasury bonds have maturity period more than 10 years.
Generally, you report the interest for the year paid.
Bonds Sold between interest dates
| Sell a bond | Part of sales price represents interest accrued to the date of sale. You must include that part of the sales price as interest income for the year of sale. |
| Buy a bond | Part of purchase price represents interest accrued before the date of purchase, you must treat this part as a return of your capital investment, rather than interest income. You should reduce your basis in the bond. |
PSQ
Source: http://www.irs.gov
No comments:
Post a Comment