Original Issue Discount is normally offered on some bonds and similar obligations in lieu of those bonds earning interest. Original Issue Discount is reported on Form 1099-OID and is to be reported as interest income to the taxpayer. To input these amounts in the software, from the Main Menu of the Tax Return (Form 1040) select:
- Select Income Menu
- Interest or Dividends (Sch B, 8815) (NOTE: If you have an amount on ‘Interest or Dividends less than $1500’, you will not be able to enter an amount on this line. In this case, transfer the items from ‘less than $1500’ to ‘Sch B, 8815’)
- Select New
- Regular Interest
- Enter the Payer’s Name
- Enter all interest listed in Box 1 of Form 1099-OID
- Select ‘OK’
- This will bring you to the Schedule B – Transaction Edit Menu.
- Line 5 – Enter any amounts from Box 3 of Form 1099-OID
- Line 7 – Enter amount from Box 4 of Form 1099-OID
- On Lines 9 – 13 enter any adjustments to OID. Since there are several different scenarios that could cause there to be amounts entered on these lines, we recommend reviewing Publication 1212 for more information. Amounts will be reported on Line 8a of the 1040.
NOTE: This is a guide on entering Form 1099-OID into the Keystone Tax Solutions program. This is not intended as tax advice.