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    gousecris's Avatar
    gousecris Posts: 12, Reputation: 1
    New Member
    		  
    #1

    Nov 3, 2008, 03:56 PM
    Interest income and tax deduction
    Hi,
    I have following questions regarding taxes.

    1. I was a resident of West Virginia. During 2007 I took a CD in JP MPRGAN CHASE BANK and got interest income of $1855.67. Now I have a question regarding tax deductions. I got form 1099. When I used online tax preparation this income counted towards both federal as well as State. So I ended up paying both federal tax and state tax on this amount. Is this correct? I was under impression that I should pay only federal tax on this interest income and not State tax. Please help me understand this correctly.
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #2

    Nov 4, 2008, 02:40 AM

    Interest income is reported both on the federal return as well on state return.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Nov 4, 2008, 05:17 AM
    Gousecris:

    What MukatA says is true IF you are a resident alien or U.S. citizen. If you are a foreign student on a J-1 or F-1 visa, then the interest is NOT subject to federal taxes, but IS subject to WV state income taxes.

    The interest that is subject to federal taxes but NOT state taxes is interest on U.S. Savings Bonds or U.S. Treasury instruments.
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