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March 12, 2023
Question

Why does tax exempt interest show up on the income summary page, and where does it get removed from taxable income?

  • March 12, 2023
  • 1 reply
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1099-INT includes tax-exempt interest.  Where is this taken our of taxable income?

1 reply

SteamTrain
Employee
March 12, 2023

@Gardie 

That summary just shows that the $$ were entered in the first place, and total income from all sources...they do not indicate that it is taxable income.

 Those tax-exempt $$ should show up on line 2a of the form 1040.

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They aren't normally used for much...but for some instances they are used in special "Modified AGI" calculations for other uses...

1)  Like, for retirees when determining what % of SS income is going to get taxed...if any.

2)  For retired folks paying into Medicare...they add back into AGI income for determining if Medcare B and D surcharges will be applied the next year.

3) Lower income folks...used to be used for determining whether one is eligible for ACA Medical insurance credits.  (I haven't checked recently to see if that has changed or not).

 

Might be a few other things too.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*