Interest

Interest income is shown either at:

1. line 8 of Form 1040; or
2. line 7 of Form 1040A; or
3. line 2 of federal Form 1040EZ for single filers no dependents.

When Form 1040 has been filed by the taxpayer and he or she has more than $400 in interest income, then a Schedule B must be attached to the return.

When Form 1040A has been filed by the taxpayer and he or she has more than $400 in interest income, then Part III of Schedule I of Form 1040A also must be completed.

Taxpayers with more than $400 in interest income cannot use Form 1040EZ.

Tax credit applicants reporting more than $16,000 in interest or having more than $16,000 in combined interest and dividend investment income should be sent automatically the special denial letter (Form HTC-4) due to net worth in excess of $200,000. In this regard, the Department has determined for the current taxable year that a 8% capitalization rate will be used for the calculation of net worth. In addition, the net worth limitation may also apply when there is a lesser estate owned. Tax Credit personnel should add the capitalized value of the Interest and dividend income to the full cash value of other real estate owned when determining net worth. Any instances in which local Tax Credit employees have questions concerning the net worth determination for individual cases should be referred to the central office coordinators.