Joann lives in Florida and receives the following payments. Which of these payments is not reported as taxable interest on her federal tax return?

a. Incorrect. The $8 that is not reported on Form 1099-INT is still taxable and must be reported, even if no Form 1099-INT was issued.

b. Incorrect. Even though they are called “dividends,” the payments from a savings and loan association are taxable interest.

c. Incorrect. The interest on a U.S. Treasury bond is subject to federal income tax; it is exempt from state income tax only.

d. Correct. Interest on a California state bond is a municipal bond exempt from federal income tax. However, the interest is still reported on the return as tax-exempt interest.