Tax Exempt 1099-OID Entries on Schedule B?

I imported several 1099-OID forms for tax-exempt bonds from a brokerage. They supply one form for each bond. On each one, box 1 (taxable OID) is 0.00. There are entries only in box 6 (acquisition premium) and box 11 (exempt OID). These forms appear to be showing up as 0.00 entries for each one in Schedule B. TurboTax is smart enough to not list my 1099-INT with only tax-exempt interest in schedule B, so why do these OID forms appear to generate 0.00 entries there? These lines should be harmless, but it appears that these entries really don't need to be included in schedule B.

If I go to the forms view, I am not able to remove those entries from Schedule B.

Is this an item that could be improved, or am I missing something?

‎February 21, 2023 9:32 AM last updated ‎February 21, 2023 9:32 AM Connect with an expert

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Tax Exempt 1099-OID Entries on Schedule B?

I eventually solved this (really only cosmetic) issue with a simple workaround. In the imported 1099-OID forms, the only non-zero entries were in box 6 (Acquisition premium) and box 11 (Tax-exempt OID). I changed the boxes with 0.00 entries to blank in each of these forms. This eliminated the spurious "0.00" entries for these forms in Schedule B. It would be nice if Turbo Tax could recognize that the original imported forms resulted in no taxable interest, and did not generate Schedule B entries of 0.00.

‎February 21, 2023 2:46 PM Expert Alumni

Tax Exempt 1099-OID Entries on Schedule B?

In general, your tax-exempt stated interest should be shown in box 8 of Form 1099-INT or, for a tax-exempt OID bond, in box 2 of Form 1099-OID and your tax-exempt OID should be shown in box 11 of Form 1099-OID. Enter the total on line 2a. However, if you acquired a tax-exempt bond at a premium, only report the net amount of tax-exempt interest on line 2a (that is, the excess of the tax-exempt interest received during the year over the amortized bond premium for the year). Also, if you acquired a tax-exempt OID bond at an acquisition premium, only report the net amount of tax-exempt OID on line 2a (that is, the excess of tax-exempt OID for the year over the amortized acquisition premium for the year).

You can delete Schedule B using these steps:

  1. Select Tax Tools from the menu on the left.
  2. Then select Tools.
  3. When the new menu pops up select Delete a Form.
  4. You will see a list of all the forms in your return.
  5. Find the form that you want to delete.
  6. Select the Form.
  7. Click Delete on the right

Try to report the information from the 1099-OID return using these steps:

  1. Click on Federal Taxes > Income
  2. In the Interest and Dividends section, click on the Start/Update box next to Interest Income on 1099-INT.
  3. On this screen, report the following items from the 1099-OID:
  4. Box 1 (OID) and Box 2 (Other Periodic interest) -- add together and enter in Box 1 of 1099-INT.
  5. Box 3 (early withdrawal penalty) -- Box 2 of 1099-INT.
  6. Box 4 (Fed tax withheld) -- Box 4 of 1099-INT
  7. Box 5 (Market discount) - Box 10 of 1099-INT
  8. Box 6 (Acquisition premium) - Include in Box 1 of 1099-INT
  9. Box 8 (OID on U.S. Treasury obligations) - Box 12 of 1099-INT
  10. Box 9 - Investment expense - Enter in the Deductions section of TurboTax: Federal Taxes > Deductions > Interest expense >Investment interest expense
    Box 10 Bond premium - Box 11 of 1099-INT
  11. Box 11 Tax-exempt OID - Box 13 of 1099-INT

See Pub. 550 for more information about OID, bond premium, and acquisition premium.

Review the link below for more information:

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‎February 21, 2023 12:33 PM

Tax Exempt 1099-OID Entries on Schedule B?

I eventually solved this (really only cosmetic) issue with a simple workaround. In the imported 1099-OID forms, the only non-zero entries were in box 6 (Acquisition premium) and box 11 (Tax-exempt OID). I changed the boxes with 0.00 entries to blank in each of these forms. This eliminated the spurious "0.00" entries for these forms in Schedule B. It would be nice if Turbo Tax could recognize that the original imported forms resulted in no taxable interest, and did not generate Schedule B entries of 0.00.

‎February 21, 2023 2:46 PM

Tax Exempt 1099-OID Entries on Schedule B?

Depending on which thread you read there are different answers on how to enter Tax Exempt OID, Acquisition Premium and Bond Premium - Tax Exempt.

I applied your answer to the 1099-INT.

For line 13, TT generates an error stating that "Bond prem tax-exemp oblig should be blank".

For line 11, TT generates an error stating that "Bond prem taxable oblig bond premium in excell of interest income must be entered on Other Deduction Stmt (Not Subject to 2% Floor), limited to the excess of prior interest income less bond premiums."

Here is my example, all items are noncovered lots for a Tax Exempt bond, I would like to know what box each number goes into the 1099-INT.

Tax Exempt OID - 47.35

Acquisition Premium - 47.35

Bond Premium - Tax Exempt Obligations - 140.77

How do we keep the input from generating errors?

Why is line 11 referencing "taxable" bonds?

It would be helpful if TT would publish clear instructions on how to handle the 1099-OID. There are too many conflicting answers on this discussion board. And lastly, why not have a 1099-OID for TT Business.

‎March 1, 2023 2:33 PM Expert Alumni

Tax Exempt 1099-OID Entries on Schedule B?

Since the Bond Premium in Box 10 is greater than the interest in Box 2 (Form 1099-OID), then you should leave Box 10 blank and keep your form with your tax files for future use. When the bond is redeemed, for tax purposes will be a sale, you will adjust your cost basis of the bond if necessary before reporting the sale on your tax return.

You can continue with the 1099-INT entry if you wish. I tested the entry using the actual 1099-OID entry without errors by leaving out the Bond Premium from tax exempt obligations. You can use the link below if you want to change your entry.

The amount may be a deduction on Schedule A if you itemize your deductions. Miscellaneous Deductions not subject to 2% AGI.

  1. Select Deductions & Credits > Scroll to Other Deductions and Credits > Select Show More > Select Other Deductible Expenses
  2. Start or Revisit > Click No > Click No > Click Yes to the screen ' Did you have any of these other expenses? '
  3. Enter your Bond Premium in excess of the OID interest income
  4. See the image below.

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‎March 2, 2023 9:53 AM

Tax Exempt 1099-OID Entries on Schedule B?

Diane, your link "Where do I report my form 1099-OID?" goes to 1099-INT. There is no landing on a form 1099-OID. I suspect you are giving instructions for the standard TT product. You talk about in your response using the actual 1099-OID entry. Since there isn't a 1099-OID for TT Business what you are doing is comparing is the oranges of TT and the apples of TT Business. Doesn't work.

So, I put $47 in box 1 of 1099-INT for the acquisition premium and $47 in box 13 for the Tax Exempt OID. ERROR. The error check says "Bond prem tax-exemp oblig should be blank". I did not enter the $147 bond premium.

I am running a fully updated TT Business. Please crank up TT Business and try what I am doing.

‎March 3, 2023 2:59 PM Expert Alumni

Tax Exempt 1099-OID Entries on Schedule B?

To clarify, how are you reporting this?

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‎March 9, 2023 9:52 AM

Tax Exempt 1099-OID Entries on Schedule B?

Depends on what iteration you are looking at. I have tried several different ways to present. I've now changed the form back to have the 47.35 acquisition premium in line 1, the 140.77 bond premium in line 11 and the 47.35 tax exempt oid in line 13. When I do the error check I get two errors; first, Box 11, 140.77, the "Bond prem tax-exemp oblig must be less than or equal to zero" and the second , Box 13, the 47.35, "Bond prem taxable oblig bond premium in excess of interest income must be entered on Other Deductions Stmt (Not Subject to 2% Floor) limited to the excess of prior interest income less bond premiums".

If I then eliminate the Box 11, 140.77, I of course, do not get an error for that. For line 13, 47.35, I now get this NEW error "Bond prem tax-exemp oblig must be less than or equal to zero".

And, if i delete the entry for line 13, 47.35. There are no errors.

As I've said before, crank up your test system for TT Business and put these entries in like I have and see what happens. I've shown you what is occurring on my desktop TT Business.

All of these errors revolve around trying to make the 1099-INT do the work of the OID form. The software code may be working correctly or not. Without having someone look at what the code is actually doing with the entries vs where those entries should reside in the 1099 and 1041 it's hard to tell what's right. I find it interesting that you can go back at least 2 or 3 years on this issue. Somewhere in all these discussions the front line tech support and the developers are not connecting on this issue. It should have been fixed a long time ago. As a side note, using or referencing OID instructions for the TT Personal/Standard (non-business TT) is a non starter. There is no form 1099-OID in TT Business. We can only work with what is available which is the 1099-INT for TT Business. What your customers can't reconcile are the TT Business generated errors when utilizing the instructions given and their entry of real world data.

If it would be easier to talk in person, you can private message me a number.