How to report accrued interest paid on bonds purchased

Forum|Forum|3 years ago
February 5, 2023
1 reply
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My combined 1099 form has a page with supplemental information not reported to the IRS, which includes an amount for "accrued interest paid on purchases." I understand that when I buy a bond, I pay the seller for the interest that has accumulated from the last coupon to my purchase date.

Do I need to input this amount into Turbotax when I put in my 1099 (in case it adjusts my interest, dividends, capital gains, etc.)? Or would this amount already be factored into the 1099 numbers, and there is nothing else that I need to do with that information? Thanks!

TurboTax Premier Online

Best answer by AmyC

No, the seller also receives a 1099. They report the accrued interest. See 2022 Instructions for Schedule B- IRS

AmyCAnswer

Employee

No, the seller also receives a 1099. They report the accrued interest. See 2022 Instructions for Schedule B- IRS

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dmbspring

The question was about interest paid, not interest earned. I think the accrued interest paid on bonds purchased should be an offset against the interest earned on those bonds. Is that not correct? If I am right, then it appears I need to do a manual override in TurboTax.

mglauner

You can enter the accrued interest adjustment in the 1099-INT section of TurboTax.

Follow these steps to make an adjustment for the accrued interest paid on your taxable bonds:

Select Federal Taxes
Under Wages & Income select Interest on 1099-INT
Enter your 1099-INT information, select Continue
Select I need to adjust the taxable amount, select Continue
Enter the accrued interest paid in the Adjustment box
Select the Reason for Adjustment as My accrued interest is included in this Form 1099-INT