Because the IRS does not provide specific guidance on how accrued interest is to be handled with tax-exempt securities, the program does not specifically address this. However, the TaxACT program does provide for entry of the accrued interest amount in the section for Form 1099-INT information entry.
To enter this information in your TaxACT return:
- From within your TaxACT return (Online or Desktop) click on the Federal Q&A tab
- Click Investment Income to expand the section and then click Interest Income (Form 1099-INT)
- Click Add to create a new copy of the form or click Review to review a form already created
- Click Quick Entry or Step-by-Step Guidance. If you select Quick Entry, be sure to scroll down to answer all applicable questions. If you select Step-by-Step Guidance, the program will proceed with the interview questions.
- Continue to the screen titled Investment Income - Tax-Exempt Interest and click Yes
- Enter the amount of tax exempt interest received from Form 1099-INT, box 8
- Enter the amount of accrued interest in the box titled Amount from box 8 that is accrued interest