Support CenterHow to enter adjustments of Interest Income
🔍 How to enter adjustments of Interest Income
If you have an adjustment that should be made for the Federal return, or if you need to adjust interest for states, this guide will walk you through where to enter those amounts.
⚠️ Before You Begin
You should be ready to:
- Access Schedule B (Federal)
- Use the Interest Worksheet (State adjustments)
- Reference F-1 help if you are unsure about the adjustment types
📊 Step-by-Step Guide
Step 1: Enter Federal adjustments on Schedule B
Use this when you have an adjustment that should be made for the Federal return.
On Schedule B, line 1b, link (F9) to the New Interest Statement: Schedule B Line 1b Interest Income.
There is a column named NAEOB. Mark the correct letter:
- N for Nominee
- A for Accrued Interest
- E for Exempt Interest
- O for OID (Original Issue Discount) Adjustment
- B for Amortized Bond Premium Adjustment
Step 2: Enter the NAEOB amount
Use this to enter the dollar amount for the adjustment type you selected in NAEOB.
The next column, NAEOB amount, should be used to enter the nominee, accrued, exempt, OID adjustment, or amortized bond amount.
Step 3: Review help and tax references if needed
Use this if you are unfamiliar with these adjustments.
See F-1 help for Schedule B and the statement for more information. If you are unfamiliar with these adjustments, consult a tax reference such as IRS Publication 17.
Step 4: Enter state interest adjustments (if applicable)
Use this when the state taxes interest differently than the Federal government.
If you need to adjust interest for states:
To make adjustments for state tax purposes, go to the State adjust column on the Interest Worksheet.
This column should be used if the state taxes interest differently than the Federal government. For instance, use this column if the interest is tax-exempt for Federal purposes, but taxable for your state.
Step 5: Add or subtract the state adjustment
Use this to indicate whether the state treatment increases or decreases your state income.
Enter either a + or - symbol in the appropriate column here to show whether the interest should be added or subtracted from the state return. Then, enter the amount that is taxed differently from Federal.
Some states may use this column differently. Check the F1 help on state forms for more information on how each state uses the column.
Step 6: Example
Example of how to enter Federal and State adjustments.
Example:
The interest income is tax-exempt for Federal purposes, but taxable for the state. Go to the NAEOB column and enter E, then enter the amount that is tax-exempt. Then, go to the State Adjust column and enter a + and the amount of the interest that is taxable to your state. The income will be shown as tax-exempt on the Federal return, and taxable on the state return.
📞 Still Need Help?
If you are having trouble, contact our support team:
Phone: 1-800-516-9442
Tags: federal,form