Tax Exempt Interest (U.S.)

debodun

debodun

SF VIP
Location
way upstate in New York, USA
I received some interest from an investment (New York Tax Free Income Fund). On the 1099 form it says it is tax exempt. My accountant said that he never heard of any "exempt" interest - as far as he's concerned ALL investment interest is taxable. Perhaps that means for Federal filing and is only exempt for the State return. Any idea?
 

I would look for a new accountant.

Municipal bonds issued in the state of New York are exempt from city and state income taxes. Municipal bond interest from bonds issued in the state may be triple tax-exempt from city, state, and federal income taxes. My 1099 tax forms come with a separate sheet or some fine print that explains each category of dividends, capital gains and interest that shows how they should be handled for tax purposes. If you can't find the information call the mutual fund company or broker that holds the investment and ask for an explanation.

Good luck!
 
I'd file online except for two reasons:

1) I don't trust giving out detailed financial info over the Internet - you don't know how secure it is.

2) I do not meet the financial requirement to file online (the sites I looked at said for household income $60K or less).
 

debodun said:
I'd file online except for two reasons:

1) I don't trust giving out detailed financial info over the Internet - you don't know how secure it is.

2) I do not meet the financial requirement to file online (the sites I looked at said for household income $60K or less).
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1. More secure than the U.S. Mail.
2. Not true.
 
What's scarier is that he works out of his home and doesn't even bother to get dressed, even when he knows people are sure to be coming this time of year. What I saw of him was naked.
 
What's scarier is that he works out of his home and doesn't even bother to get dressed, even when he knows people are sure to be stopping by at this time of year. What I saw of him was naked. I think it very unprofessional, but everyone around here raves about his tax service. I guess when you think you're good, you can do anything you want.
 
I have to say I've never seen my CPA naked.

It sounds like people are being penny wise and pound foolish. I'm willing to bet that many of his customers would save more in taxes if they were willing to pay more in fees to a fully clothed professional.

“The bitterness of poor quality remains long after the sweetness of low price is forgotten” – Benjamin Franklin

Good luck!
 
He's not cheap. It cost's m $100 for each form he has to file. Cost more that I'll be getting back.

What bothered me most about him is that me made me file a document naming him as my POA before he would even look at my return.
 
debodun said:
He's not cheap. It cost's m $100 for each form he has to file. Cost more that I'll be getting back.

What bothered me most about him is that me made me file a document naming him as my POA before he would even look at my return.
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That doesn't sound right to me, if you signed a blanket power of attorney with your accountant I would do whatever it takes to revoke it. I signed a document that authorizes my CPA to electronically file my return on my behalf and also a document authorizing him to represent me in any action by the IRS that involves his preparation of the tax forms but not a true blanket POA.

I looked at last years bill and it cost $320.00 for my CPA to prepare and file the state and federal returns. The fee also included his opinions on how to structure my income for 2016 in an effort to minimize my tax liability, IMO his advice is well worth his fee.
 
I agree with Aunt Bea. I have always heard that municipal bonds are tax exempt. Debodun these days I trust online filing much more than I do mailing all that personal information. i've experienced too many glitches and mistakes by the postal service. Who's to say a postal employee won't open your envelope and use the information? They have been known to open envelopes that look like birthday and Christmas cards and take money out. If you file using a tax program that you installed...unless you have not secured your computer, you are the only person who sees the input. I don't know if a hacker could get in and see what you're doing IF you don't have a firewall, antivirus and malware. But everyone who uses a computer should have those things. Anyway, if you're filing using one of the online services, they guarantee security and should be safe as long as their URLs start with https:// Some sites have added the word Secure in front of that.
 
debodun said:
What bothered me most about him is that me made me file a document naming him as my POA before he would even look at my return.
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Ummm.....limited or not, revoke that PoA immediately and find another accountant, also ASAP. We have moderately complex taxes and NO accountant or CPA needs a PoA to do a tax return. NONE.
 
There are two exceptions where tax free muni interest is not tax free.

Not all muni interest is tax free at all times. The amt tax system allows only certain amt tax free bonds to be considered as tax free. Under the amt tax just being muni interest does not qualify .So if you trip the amt the muni income may be taxable.

Also when testing to see if your social security is taxable or not all muni interest is calculated back in to your magi. It counts for purposes of testing your income to see if you hit the level where your ss gets taxed at some level..

But to make a statement that no muni interest is ever tax free is a sign the accountant is an idiot.
 
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Debodun: Is he the only accountant in town?! With the degree of unprofessionalism you describe plus him requiring a POA (what accountant DOES that?!) and other unorthodox things he's done...I wondered why you didn't drop him sooner.
 

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