Understanding Taxes - Assessment: Interest Income

Module 3: Interest Income

Part 1

Determine whether the interest income is taxable or tax-exempt. Answer the following questions by typing the words taxable or tax-exempt in the space provided. To assess your answers, click the Check My Answers button at the bottom of the page.

Interest received on a certificate of deposit (CD) is

Interest received on a bond issued by the state of California to fund school buildings is

Interest received on a loan you made to your business partner is

Interest received on a bond issued by the city of Austin, Texas, for a redevelopment project is

Interest income is considered

A. earned income
B. unearned income

Part 2

Review Form 1099-INT for Gloria Sanchez by clicking the button View Form 1099-INT. Then, answer the following questions by typing your answers in the space provided. To assess your answers, click the Check My Answers button at the bottom of the page.

What is the taxpayer's full name?

How much interest income, not including interest on U.S. Savings Bonds and Treasury obligations, did the taxpayer earn?

Did the taxpayer earn interest on U.S. Savings Bonds?

A. Yes
B. No

Which box shows the federal income tax withheld?

Should taxpayers report taxable interest income that does not appear on Form 1099-INT?

A. Yes
B. No