Purchased Interest

Forum|Forum|1 year ago
February 19, 2025
2 replies
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My 1099 has a Supplemental Tax Information listing PURCHASED INTEREST. Do I need to include this on my tax return and if so, where?

Thanks

Ask the Experts - Deciphering - Feb 2025

DianeW777

No. Only report the amount you received on Form 1099-INT on your tax return. Purchased interest may be an amount you paid for the accumulated interest on bonds that accrued before you bought the bonds that haven't yet matured.

You can reduce any interest income on the bond for amounts you actually paid for interest when your purchased it.

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Momofsix1Author

So if my 1099 is showing some PURCHASED INTEREST as Supplemental Tax Information where do I enter it to reduce the amount of interest listed in the 1099?

Thanks

DianeW777

It depends on what 1099 you have. If it's a 1099-B or a 1099-INT use the information below.

My advice is to report the accrued interest as interest income (Form 1099-INT) instead of 1099-B. There you can make your adjustment for the portion of accrued interest you paid at purchase. If you are reporting Interest income on a bond that had accrued interest at the time you purchased, then you would reduce your interest income by the accrued interest at your purchase date. Enter the full amount of the interest, and then enter the Accrued Interest paid as an adjustment to reduce it.

Open your TurboTax return:

Search (upper right) > Type 1099int > Click on the Jump to... link
Enter your interest income > Continue > Select 'I need to adjust the interest reported on my form'
Enter the adjustment amount (accrued interest at purchase) > Select 'My accrued interest is included in this 1099-INT'
This will accomplish the correct taxable income for your return.

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JaneChen

In Turbo Tax there is an option "My accrued interest is included in this 1099-INT" to interest adjustment. However, my 1099-INT does not have an item "accrued interest" , my broker provided supplemental documents for accrued interest but not reported to IRS. Should I still choose "My accrued interest is included in this 1099-INT" or "other reasons" ? Thanks.