Out of Scope:
- Accrued savings bond interest
- Bonds sold between interest payment dates not reported by a broker
- Series EE or I bonds when interest is reported annually
- Education exclusion for savings bond interest (Form 8815)
- 1099-DIV Section 1202 gain
- 1099-DIV cash or noncash liquidation distributions
- Adjustments needed to a Form 1099-OID or did not receive one but should have
- Inclusion of child’s interest and dividends (Form 8814)
- Form 8938 (Foreign assets)
|← Click picture to the left for details of interest and dividend types and their treatment in TaxWise. A short summary of entry procedures for the Schedule B Interest Stmt is below.|
Tax Slayer entry:
Federal Section > Interest and Dividends > Interest or Dividend Income
- Taxable interest income from Forms 1099-INT or 1099-OID or their equivalents from a broker statement.
- If from US Savings Bonds or Government obligations, it can be excluded from Colorado income.
- Interest reported annually (rather than when bonds are cashed in) is OUT OF SCOPE.
- Some interest may be excludable from income if for education expenses (Form 8815) but not if filing MFS. Form 8815 is OUT OF SCOPE however.
- Enter interest from Form 1099-OID as regular interest – do not enter in the OID Adjust line!
- IRA interest is non-taxable unless it is interest earned on an overpayment to an IRA.
Credit Union dividends:
- Credit Unions often report interest as “dividends”. They should be entered as regular interest on the Interest Stmt.
Tax Exempt Interest Income:
- Municipal bonds not taxable to federal.
- CO municipal bonds are not taxable to the state of Colorado.
- Municipal bonds from other states are taxable to the state of Colorado. In this case, also add the amount as taxable to the state.
- Not taxable, this is a return of investment cost.
- Taxpayers use this figure to reduce their basis when they eventually sell the investment.
- Brokerage statements may include the percent of income of funds that come from these sources – look for a table as additional info that came with the statement.
- If from Government obligations, it can be excluded from Colorado income. Includes Puerto Rico, U .S . Virgin Islands, American Samoa, Guam, the Commonwealth of the Northern Marianas, Wake Island, the Midway Islands, and Johnston Island .
Seller Financed Interest Income:
- If a 1099-INT is received, it is entered as ordinary interest.
If there is state withholding reported for interest or dividends, see the CO 104 resource page.