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Notes/Handouts Pub 17, Chapter 7 & 8 Pub 4012, Tab D and Tab 2

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Presentation on theme: "Notes/Handouts Pub 17, Chapter 7 & 8 Pub 4012, Tab D and Tab 2"— Presentation transcript:

1 Notes/Handouts Pub 17, Chapter 7 & 8 Pub 4012, Tab D and Tab 2
2/16/2019 B Income - Interest and Dividends v11.0 VO.pptx Interest & Dividends Pub 17, Chapter 7 & 8 Pub 4012, Tab D and Tab 2 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

2 Taxable Interest Income
Notes/Handouts 2/16/2019 Taxable Interest Income Income from banks and credit unions, CDs or bonds Interest income is unearned income (money, not TP, is earning the income) Report interest in year earned or, in case of bond purchased at discount, increase in value is taxable in year of increase Make all interest entries on TaxWise “Interest Statement of Schedule B” 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

3 Tax Law Training (NJ) TY2011 v11.0
Notes/Handouts 2/16/2019 1099-INT 2008 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

4 Interest Statement Flows to 1040 Line 8a & 8b
Notes/Handouts 2/16/2019 Interest Statement Flows to 1040 Line 8a & 8b INT $$$$ OID $$$$ SPLIT INCOME – MFJ vs MFS Flows through Schedule B, Part 1 – if OVER $1,500 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

5 Tax Law Training (NJ) TY2011 v11.0
Notes/Handouts 2/16/2019 The Bank Statement 2008 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

6 Tax Law Training (NJ) TY2011 v11.0
Notes/Handouts 2/16/2019 Dividends Main components of 1099-DIV Statement Payer Ordinary Dividends Qualified Dividends (included in Ordinary Dividends) Capital Gain Distribution Federal Withholding Tax Make all entries to Tax Wise “Dividend Statement for Schedule B” 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

7 Tax Law Training (NJ) TY2011 v11.0
Notes/Handouts 2/16/2019 1099-DIV 2008 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

8 Tax Law Training (NJ) TY2011 v11.0
Notes/Handouts DIVIDEND STATEMENT – Flows to 1040 Line 9 2/16/2019 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

9 Tax Law Training (NJ) TY2011 v11.0
Notes/Handouts 2/16/2019 Interest – NAEOB Nominee – Interest transferred to, and taxable to, 3rd party Accrued – Interest accrued for bonds purchased between interest payment dates included in purchase price, not income Exempt from Federal Tax – Interest on state, county or city bonds (political subdivisions) OID – Interest received previously included in taxable income (rarely seen) Bond – Amortized Bond Premium – Adjustment to total OID received See IRS Pub 1212 for more detail 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

10 Tax Law Training (NJ) TY2011 v11.0
Notes/Handouts 2/16/2019 Tax Exempt Interest Generally bonds issued by: State/political subdivisions (county or city) District of Columbia U.S. possessions and political subdivisions Savings bonds used for education (Form 8815) All tax exempt interest must be reported on 1040, Line 8b 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

11 Tax Law Training (NJ) TY2011 v11.0
Notes/Handouts 2/16/2019 Tax Free Interest Interest from all State and Municipal Bonds are exempt from federal taxes NJ bonds exempt from NJ taxes Other States’ bonds are NOT exempt in NJ Interest from U. S. Savings Bonds are exempt from NJ tax 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

12 Original Issue Discount Interest (OID)
Notes/Handouts 2/16/2019 Original Issue Discount Interest (OID) ENTER AS ORDINARY INTEREST 2008 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

13 Taxable And Non-Taxable Interest & Dividends On Federal Returns
Notes/Handouts 2/16/2019 Taxable And Non-Taxable Interest & Dividends On Federal Returns Interest Input only taxable interest in Amount column Input non-taxable interest by entering “E” and insert amount in NAEOB columns Dividends Input only taxable dividends in “Total dividends” column Input non-taxable dividends in “Exempt int. div.” column 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

14 Tax Law Training (NJ) TY2011 v11.0
Notes/Handouts 2/16/2019 Taxable And Non-Taxable Interest And Dividends On Federal vs NJ Returns Step 1: Input taxable and non-taxable amounts on respective worksheets for Federal purposes as noted on previous slide Step 2: If State tax treatment is different than Federal adjust for State by entries in State +/- Column 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

15 Interest Statement Examples Flows to 1040 Line 8a & 8b
Notes/Handouts 2/16/2019 Interest Statement Examples Flows to 1040 Line 8a & 8b INT $$$$ OID $$$$ SPLIT INCOME – MFJ vs MFS Flows through Schedule B, Part 1 – if OVER $1,500 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

16 Tax Law Training (NJ) TY2011 v11.0
Notes/Handouts DIVIDEND STATEMENT – Flows to 1040 Line 9 2/16/2019 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

17 Interest & Dividends From Schedule K-1
Notes/Handouts 2/16/2019 Interest & Dividends From Schedule K-1 Schedule K-1 is in scope only if there are just Interest, Dividend, Capital Gains, or Royalties Always check with Site Coordinator for all K-1s Handling of Capital Gains and Royalties are covered in separate modules Enter Interest and/or Dividends directly on Schedule B Worksheet, do not prepare or make entries on TW Form K-1 Include “K-1” in Payer field 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

18 Interest & Dividends From Schedule K-1
Notes/Handouts 2/16/2019 Interest & Dividends From Schedule K-1 12/29/2011 Tax Law Training (NJ) TY2011 v11.0 NJ Training TY 2008

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