Alabama Tax Form 40 Schedule B and CR - Interest and Dividend Income and Credit for Taxes Paid to Other States Instructions

Instructions For Schedule B - Interest and Dividend Income

Purpose of Schedule

Use Schedule B if you are filing Form 40 and the total taxable and nontaxable income from interest and dividends is $1500 or more.

Mutual Funds. If you received a 1099DIV, 1099INT or substitute statement from a brokerage firm or mutual fund, include the interest and dividends on Schedule B. Capital gains should be reported on Schedule D. List the mutual fund or brokerage firm's name as the payer and enter the total interest or dividends shown on that form on Schedule B.

Interest Income

All interest you received in 2008 is taxable for Alabama purposes except interest on obligations of the United States or its possessions, and interest on obligations of the State of Alabama or any county, municipality, or other political subdivision of Alabama.

Show the name of the payer and the amount of all interest you received on Schedule B. Exempt interest should be listed in Column A and taxable interest in Column B.

Examples of TAXABLE Interest -

• Accounts (including certificates of deposit and money market accounts) with banks, credit unions, and savings and loan associations.
• The percentage of dividends not derived from interest on United States obligations and/or Alabama municipal obligations which are received from a regulated investment company.
• Asian Development Bank.
• African Development Fund.
• Building and loan accounts.
• Federal Home Loan Mortgage Corporation.
• Federal National Mortgage Association (FNMA).
• Government National Mortgage Association (GNMA).
• InterAmerican Bank, International Bank for Reconstruction and Development, and World Bank.
• International Finance Corporation.
• International Development Association.
• International Monetary Fund.
• National Consumer Cooperative Bank.
• Refunds of federal income tax.
• Refunds of state income tax.
• Federal Land Credit Banks.
• Federal Housing Authority.
• Small Business Association.

Examples of EXEMPT Interest -

• The percentage of dividends derived from interest on United States obligations and/or Alabama municipal obligations which are received from a regulated investment company.
• Bank for Cooperatives.
• Student Loan Marketing Association (SLMA).
• Bonds issued by the Government of Puerto Rico or the Government of Guam.
• Bonds issued by the government of the Virgin Islands
• Federal Financing Bank.
• Federal Land Banks.
• Federal Intermediate Credit Banks.
• Federal Home Loan Banks.
• Production Credit Associations.
• U.S. Treasury Bills, U.S. Treasury Notes, or U.S. Series E and H Bonds.
• Tennessee Valley Authority.
• Federal Farm Credit Bonds.
• Federal Home Administration.
• Commodity Credit Corporation.
• Federal Deposit Insurance Corporation.
• Federal Saving & Loan Insurance Corporation.
• General Insurance Fund.
• GSA Public Building Trust Participation Certificates.
• Participation Certificates in the Federal Assets Financing Trust.
• Special Food Service Program.

Dividend Income

All dividends, including liquidating dividends, you received in 2008 are fully taxable. Gain or loss on liquidating dividends should be reported on Schedule D. Dividends from savings and loan associations are also taxable. Include cash and the value of stock, property, or merchandise you received as a dividend.

List the payer's name and show the amount of income. If securities are held in a brokerage account, list the name of the brokerage firm as the payer.

Instructions For Schedule CR - Credit for Taxes Paid To Other States

See the general instructions for credit for tax paid to another state on page 10. Below is an example when all of the income in the other state is not taxed on the Alabama return. In such situations, you may not be entitled to the full amount of tax paid to the other state. The following example can be used by changing the figures to fit your income and/or loss.

The taxpayer is a single filing resident of Alabama and has income from wages of $66,666.67. The taxpayer has gambling winnings of $100,000.00. The taxpayer has substantiated gambling losses of $50,000.00 of which only $30,000.00 is allowed as a deduction on the other state's return.

Use this Worksheet to compute the tax on the income from the other state under Alabama Tax Law.