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Although some interest is exempt from federal income tax, such as interest from certain government-related bonds, the taxpayer must report tax-exempt interest.
Taxpayers must complete Part I of either Form 1040A Schedule 1 or Form 1040 Schedule B if they:
- Have interest income of more than $1,500, or
- Want to claim an exclusion for savings bond interest the same year they qualified for higher education expenses, or
- Receive Form 1099-INT for interest as a nominee for interest that belongs to someone else
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