John M. Hoffman & Associates CPAs

Frequently Asked Questions

Investment Income (Interest & Dividends)

 

Do I need to report tax exempt investment income (municipal interest or dividends)?

Yes, the government requires that investment companies report this type of income and you are required to report these on your tax return. Some municipal interest is subject to the alternative minimum tax. If so, it should be reported to you as such.

You also need to be aware of the state tax implications of municipal interest and dividends. For example if you are a Massachusetts resident and you own a New York municipal bond, the interest income from that bond is subject to Massachusetts income tax.

As you can imagine, we simply request that you provide us with the originals (that we return) of the tax reporting documents related to the tax exempt income.