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Why is Tax-Free Interest a 'Stand-Alone' Input in Tax Clarity?

Tax-Free Interest Impacts the Taxation of Social Security and Medicare Premiums.

While interest from municipal bonds may be "tax-free" on a federal tax basis, it can impact the taxation of other income sources such as Social Security.  The IRS includes income from tax-exempt sources in its calculation of Modified Adjusted Gross Income (MAGI) when calculating the Provisional Income which is used to determine how much of a Social Security benefit is taxable.  In addition to its impact on Social Security, federally tax-exempt interest can impact Medicare Part B and Part D premiums paid by the client.   

You can find "tax-free interest" within the "other income" section of Tax Clarity.