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Tax Question
Old 08-27-2004, 12:00 AM   #1
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Tax Question

I have individual TIPS and some are in a taxable account. My daughter is starting college, and if I can do a 1040A instead of a 1040, I will not be required to list my assets on the Student Aid application. The 1040A handles only interest, ordinary dividends, and cap gain distributions. Do TIPS throw off any other type of income that would force me to use a Schedule D/1040? I haven't owned them before and don't know how the 1099 classifies the inflation bump-up in TIPS. Anybody know?
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Re: Tax Question
Old 08-27-2004, 12:35 AM   #2
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Re: Tax Question

You'll get a 1099-INT for the interest and a 1099-OID for the principal adjustment. You just sum the two for your taxable interest income. I haven't filed a 1040A in a *long* time, so I have no idea if you're covered there.

IIRC, you bought your bonds on the secondary market at a premium. That may have complicated things, since the IRS will sometimes want you to amortize the premium. You probably want to talk to a CPA.
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Re: Tax Question
Old 08-27-2004, 01:07 PM   #3
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Re: Tax Question

Whats a 1040a?
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Re: Tax Question
Old 08-27-2004, 03:08 PM   #4
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Re: Tax Question

Thanks Wab - I thought it was interest, but wasn't sure. I didn't know about the amortization. That sounds like trouble.

TH, I haven't used a 1040A for at least 25 years. I'll probably jump through these hoops for naught, but if it works, it could be worth a couple thousand in financial aid.
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