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22 April, 00:14

In 2018, Uriah received the following interest payments:

a) Interest of $300 on an overpayment of 2017 Federal income taxes

b) Interest of $400 from his bank certificate of deposit.

c) Interest of $1,000 on municipal bonds

d) Interest of $1,500 on US savings bonds (Series HH)

What amount, if any, should Uriah report as taxable interest income on his 2018 individual income tax return?

a. $0

b. $700

c. $2,200

d. $3,200

e. None of the above

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Answers (1)
  1. 22 April, 00:15
    0
    C) $2,200

    Explanation:

    Interest generated by municipal bonds is not taxed by the federal or state governments. While interest generated by US Securities is not taxed by the state governments, but it is taxed by the federal government. The interest generated by her certificate of deposit is taxed as well as the interest earned by the overpayment of prior federal taxes.

    $300 + $400 + $1,500 = $2,200
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