Taxable Investment Income - Where to Report Taxable Income

For the majority of people, investments are pretty easy to report on the tax return. All you need are the 1099-INT and 1099-DIV forms. These forms are sent by the financial institutions and brokerages at the beginning of the year. For 2009 these forms are sent in early 2010.

Which tax forms are used for reporting  the  investment income  ?
Two of the common forms that these investment income is reported  in Schedule B of Form 1040 or Form 1040A.  The totals from these schedules rollup to the main 1040 form.  Its as easy as that.

Many investments however have some specialized rules that need to be followed. These investments include tax free muni bonds, bond funds, Savings bonds, foreign investments, investments from partnerships or corporations, income from trusts, estates etc.

Deductions for  Investment Income
There are some deductions that could offset the taxable income from investments.  These deductions effectively lower your taxes for investment income. These deductions include :

• cost of a safety locker that you use to store your investments
• cost of investment advice
• custodial fees
• cost of financial publications
• cost of software that you use to manage your investments

Most financial software including online tax preparation sites walk you through the process of capturing and reporting these investment income deductions.

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