Income Beginner: Taxes in Bond Investing

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1.
You don't have to pay state income taxes on interest earned from Treasury inflation-adjusted securities.
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True. You are exempt from state income taxes on interest earned from Treasury inflation-adjusted securities.
2.
If you invested in a series EE bond in 1998, you can keep your initial investment earning interest in a tax-sheltered bond until _______.
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2028. Your series EE bond will earn interest for 30 years.
3.
If you are in the 35 percent tax bracket and you are contemplating buying a municipal bond that pays a 7 percent yield, how much will you need to earn on a taxable bond to equal what you will earn on the municipal bond?
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10.77 percent.
4.
The amount of one's original issue discount interest can be found on Form 1099-OID.
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True. Form 1099-OID exists just for this purpose.
5.
When both federal and state taxes are accounted for in the formula for taxable equivalent yield, the yield rises.
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True. When more than one tax is involved, it will rise.
6.
Of the following tax brackets, which one will leave you with the highest yield on a municipal bond compared to a taxable bond?
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35 percent. The higher the tax bracket, the more you earn when the bond is compared to a taxable bond.