Hi,

I live in Minnesota and this year I was fortunate enough to finally receive a FICA tax refund for 2001-2003, part of my years in residency. I received a 1099-INT form from my hospital listing $1400 in box 1, apparently interest paid to me along with the refunded FICA taxes. My question is whether this is regular interest income or whether there is any special state or federal treatment of this interest? Thank you very much for your advice.

Zip Code: 55901

That's great that you got back your FICA from those years. You probably got about $10k back from the government for those 3 years.

When the hospital receives these refunds, it's common for them to keep the money in an interest bearing escrow account until such time that the Statute of Limitations applies, and the IRS can't ask for this money back.

The interest is taxable to you just like interest earned at a bank. It's not US Treasury interest or Municipal bond interest.

Zip Code: 01801