Users' questions 

Are municipal bonds reported on tax return?

Leia Doyle

Are municipal bonds reported on tax return?

Municipal Bonds (Munis) are interest-bearing debt obligations issued by a state or local municipality. In general, interest paid on municipal issues is exempt from federal taxes and may also be exempt from state and local taxes in the state of issuance. Form 1099-INT reports tax-exempt interest from municipal bonds.

Are municipal bonds always taxed?

Although municipal bonds pay interest that is generally exempt from federal and state income taxes, it’s not always free from all taxes.

Which bonds are exempt from state taxes?

Income from bonds issued by state, city, and local governments (municipal bonds, or munis) is generally free from federal taxes. * You will, however, have to report this income when filing your taxes. Municipal bond income is also usually free from state tax in the state where the bond was issued.

What is the return on tax free municipal bonds?

High-yield municipal bond returns are up around 1.5% year to date and have generally outperformed many other fixed-income asset classes such as investment-grade corporate bonds which have gone down 5.3% year to date.

How do I buy municipal tax-free bonds?

Municipal bond funds offer professional management of a bond portfolio. A manager or group of managers select and buy bonds for the mutual fund. You would simply buy shares in the municipal bond mutual fund. You can do so through either a traditional or online brokerage firm or directly from a mutual fund company.

Which state has the best municipal bonds?

The Best Municipal Bonds:

  • Nuveen High Yield Municipal Bond Fund.
  • Texas bonds.
  • Washington bonds.
  • New York bonds.
  • Florida bonds.
  • Georgia bonds.

    How much money do you need to invest in municipal bonds?

    This is why municipal bonds generally pay lower yields than similar corporate bonds. Additionally, muni bonds generally require a $5,000 minimum investment while corporate bonds start at $1,000. In short, the risk-reward profile for munis and corporate bonds is different.