Tax Free Bond Treatment

drollin909

Program needs work for tax free municipal bonds.

markus1957

Care to elaborate?  Not disagreeing, as I have some of these but other than not taking advantage of all the data being provided in the download (typical of all holdings, not just munis), I'm curious where you are having difficulties.

NotACPA

@drollin909 You need to elaborate upon what you think Q should be doing that it isn't doing.

Also, what Q product are you running?  What BUILD of Q?  Do HELP, About Quicken for this info.

Lastly, how do you have those bonds setup in Q?  As Munis?

Klhansen

What irks me is that in investment accounts that have tax free muni's in them, when posting interest income, the only action available seems to be "IntInc" from the pulldown, which is also entered in the description field as"_IntInc", even though "_IntIncTaxFree" is available in the category list. Adding a note in the memo field that the interest is tax free doesn't do anything. All the categories with the underscore in front appear to be default investment categories assigned by Quicken and are not editable.

How the heck do you go about tagging a security (muni bonds for example) as tax-free? Or adding an action called IntIncTaxFree that's associated with "_IntIncTaxFree"? It seems there's no way to sort out the tax exempt interest income when doing reports. Sure would be nice to have that available. Actually make that ESSENTIAL.

markus1957

If you check the tax free box in Security Details for a muni, the interest payment when downloaded will be treated as tax free in Quicken, even though it shows as IntInc in the Action column.

Klhansen

@markus1957
That doesn't help if I'm manually entering the transaction (I really don't trust downloading, given all the comments about this and that brokerage not downloading correctly.) The tax free box IS checked. Why shouldn't there be a tax-free interest action in the transaction entry field?

I did just find these instructions in Quicken help however. But it seems to be duplicative.

"Record interest on a municipal bond
About recording interest for a municipal bonds
Municipal bonds can be tax free on the Federal level but taxable at the state level (it depends on where you live and what bond you’re purchasing).

Record municipal bond interest as miscellaneous income; Quicken adds the income as a MiscInc transaction in your investment account transaction list.

Open the account you want to use.
Click Enter Transactions.
In the Enter Transaction list, select Inc - Income.
Record the interest as miscellaneous income.
Categorize the interest payment.
Why would I do this?
If part or all of the bond is taxable, create a category for municipal tax interest and link it to the correct tax form. At tax time, you can run a category report and obtain the total taxable interest for all your municipal bonds."

Yes, the instructions in Quicken help would serve the purpose, but it doesn't really make sense to classify tax free interest as miscellaneous income and create your own category when one already exists. The program should take care of that without forcing you to download entries.

markus1957

Even entered manually, Quicken Tax & Income Reports, Tax Planner, etc., treat bonds checked as tax free as tax free interest.  They will not show up as regular interest in a tax related report.  Further they are segregated from regular interest in an Income report.  

Rocket J Squirrel

Run an Investment Income report. You will see the _DivIncTaxFree and/or _IntIncTaxFree totals.

If you then double click on one of those lines to "drill down" to individual transactions, they will also appear with the "TaxFree" designation.

If you further drill down to an individual transaction, you will see dividend or interest without "TaxFree" because that attribute does not exist at that level of drill-down.

Quicken is doing the right thing.

Klhansen

Thanks Markus and Rocket
You did help me find how to get a report that showed me the correct information I needed. It was definitely buried.
And Quicken Help wasn't much help.