New York Interest Income on U.S. Government Bonds
Interest income earned from U.S. government bonds or other U.S. government obligations is generally taxable at the federal level. However, New York State and New York City have specific rules regarding how this income is reported and taxed.
Reporting Requirements
- Form IT-201 (Residents): If you are a New York State resident and included interest income from U.S. government bonds on your federal return (Form 1040, lines 2, 6, or 11), you must report it on Line 28 of Form IT-201.
- Form IT-203 (Nonresidents/Part-Year Residents): If you are a nonresident or part-year resident and included such interest income on your federal return, report it on Line 27 of Form IT-203.
- Form IT-225 (Partnerships/S-Corps): For partnerships or S corporations, interest income from U.S. government bonds is not taxed by New York. Do not enter this on Form IT-225; instead, report it on the appropriate individual form (IT-201 or IT-203).
Special Considerations
- Build America Bonds: If you received interest from Build America Bonds, you may qualify for a special condition (Code A6) to reduce your New York adjusted gross income (NYAGI). This applies to Form IT-203-X and must be reported accordingly.
- Federal Adjusted Gross Income (AGI): For New York City household credit calculations, federal AGI is typically the amount from Form IT-201, line 19. However, if Build America Bond interest was included, subtract that amount to determine the correct AGI for credit purposes.
- Exempt Income Reporting: If you are reporting income from state and local bonds (including New York State bonds), you must subtract exempt interest from your federal return when reporting on Form IT-225, line 5.
Important Notes
- Interest from U.S. government bonds is not exempt from New York State or New York City income tax.
- You must report the full amount of interest income earned from U.S. government obligations on the appropriate New York state form.
- Ensure consistency between your federal return and New York state return to avoid discrepancies.
Source:
Form IT-2658
Form IT-360.1
Disclaimer: Always verify details with the official Federal or State Department of Revenue Forms and Instructions.