The other day, I received a tax form (1099-INT, income from interest) in the mail. The form came from Bank of America. I was not aware of having an interest-earning account at Bank of America. My only experience with this particular financial company was when a Wachovia credit card I have (unused but held to avoid fees on my checking account) was transferred to Bank of America after Wachovia decided to get out of that business.
This credit card could not have been the source of the unknown interest, so I called the customer service phone number conveniently located on the tax form. Someone from Bank of America answered right away. After providing my account number, the customer service representative quickly had an answer for me, even before I asked the question.
The interest reported on this 1099 apparently comes from the security deposit I placed with my landlord company when I moved in last year. At first, I was disappointed that I would have to pay tax on this interest even though I have no access to the account. However, I added the interest information to my tax return in progress at TaxAct, and it resulted in no change in my tax due. Perhaps it’s just not a significant enough amount.
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I had forgotten about an account we keep a little money in that is at our local bank. Thought I was pretty much done with the taxes now I have to go back and fill that interest in. I wish we would go to a simpler tax system.
LOL! As soon as I read your post heading I said to myself “must be the good old rental deposit account.” For the first time this year, I actually remembered that it would be coming (also for the first time, I’m ready to file my taxes early, and am just waiting for that last form from my landlord). Usually, that interest is pretty negligible anyway.
I am under the impression (possibly mistaken) that unless your 1099-INT is above $100 it won’t affect your tax liability, though of course you should still enter it on the form.
How is TaxAct working for you? I have never used it. I am looking for the best option for cheap e-filing for the year. I can handle doing the details of my taxes but would love to find a good place online since now I make too much to use the IRS free file finally. Would you recommend it?
@Rev and Flexo
I would like to hear what you think about it as well… I have always just gone to the IRS site to get the free Federal link to a bunch of tax prep sources. I have yet to try TaxAct
Rev & Christian: TaxAct will be the topic of a future post… when it comes to my final, final version of my taxes, I will be filing with the help of a tax accountant (if I find one). In short, it asks the right questions and tallies the total, offering suggestions and reminders, very similar to TurboTaxOnline.
Taxes jump incrementally. I forget what the jump is, $50? So anyone in that range pays the same tax.
That’s interesting. Now that you know how much the interest is and where it’s being kept, when you’re ready to move can you get the landlord to refund the interest as well as the deposit?
It’s been 20 years since I’ve rented. Sure don’t remember any landlords returning a deposit plus interest. We felt lucky just to get the deposit back at all!
I sold my shares of my company to my brothers and got a lump sum + monthly payments for the next 7 years. We were an “S” Corp. Now I get a 1099-INT in the mail listing interest income in the amount of $132,000.00 with nothing withheld. Generally speaking, am I liable for Federal Income Tax on this $132K?