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    Question

    What is the purpose of Line 8b (tax-exempt interest) on Form 1040?
    An entry on Line 8b has no effect on the Total Tax on Line 60. What reason does the IRS have to want/need to know this information?
    a few seconds ago 5 Answers

    Best Answer

    Chosen by Asker
    As for WHY you have to report it, it is income. It affects taxability of social security income. It is included in MAGI when determining eligibility for EIC. When the bonds are sold, it can cause capital gains/losses. If you claim sales tax on schedule A, it's used to calculate the standard amount. Have you have been reading internet SPAM? ANYONE in ANY state can purchase tax-free municipal bonds and get tax-exempt interest income. That interest is reported on line 8b of the 1040 tax return. There is nothing special about this income.
    a few seconds ago

    Other Answers

    • Under some circumstances, "tax exempt interest" still results in some tax.

      by Judy - 21 hours ago

    • because it can be considered in other aspects of your tax return that you are not aware of

      by tro - 21 hours ago

    • It actually has an effect on the total tax. Non-taxable income can actually determine the percentage of other income that is taxed (ie. social security) and can lower tax credits (ie. Earned Income Tax Credit).

      by shoredude2 - 21 hours ago

    • The information is required to compute taxable portion of social security and various other items that are affected by actual dollar amounts recieved.

      by acmeraven - 21 hours ago

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