Other Taxable Income
Interest and dividend income
Do you have to report a state income tax refund?
Tax consequences of alimony
Tax arbitrage and alimony
Is my pension taxed?
Interest and dividend income
Your bank or mutual fund reports this income on form 1099-INT or 1099-DIV
"Interest" from a money market mutual fund is actually dividend income
Report on Schedule B if total is more than $400
Do you have to report a state income tax refund?
Depends on whether or not you itemized the previous year
Don't report if you took standard deduction last year
Do report if you itemized last year
Tax consequences of alimony
Alimony received is income to recipient
Counted as earned income for purposes of IRA contribution
Alimony paid is a deduction to the payer
Tax arbitrage and alimony
If the ex-spouses have different marginal rates, there's an incentive to turn property settlements into alimony payments
Creates tax arbitrage opportunity
IRS creates complex recapture rules to prevent this
We'd probably all be better off under a flat tax system that removes the incentive to get involved in tax arbitrage
Is my pension taxed?
In most cases, yes
You should receive a 1099-R showing your reportable income from a company pension, IRA or similar retirement account