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RE: A correction

Comment comment by Brandon on 01 August 2007

I'm not sure I follow you. If the tax rate on taxable interest is capped at 15%, then of course it can be lower (as in your case), but how do we know it can be higher? Can you assume simply because it is included as a line item that it is treated the same as salary/wages? I guess that would make sense (given the layout of form 1040), but how, then, do the Bush tax cuts take effect?

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RE: A correction by Brandon :: NR9

Perhaps I found my own answer. Per the form 1040, line 8a instructions to which you linked:

Enter your total taxable interest income on line 8a. But you must fill in and attach Schedule B if the total is over $1,500 or any of the other conditions listed at the beginning of the Schedule B instructions (See page B-1) apply to you.

Perhaps it is only when a Schedule B (second page) is required that you have the potential to take advantage of Bush's tax cuts...

In any case, for informational purposes: According to this article on bankrate.com, the conditions for filling out Schedule B include:

  • You sold your home or other property, provided seller financing and the buyer used it as a personal residence.
  • You received interest or dividends as a nominee, that is, the earnings are in your name but they actually belong to someone else.
  • You received a Form 1099 for interest as a purchaser of a bond with accrued interest.
  • You received a Form 1099-INT for tax-exempt interest.
  • You had a foreign account or received a distribution from a foreign account.
Posted 01 August 2007, Hide, Parent, Reply