2023 I Bonds Interest in TurboTax, H&R Block, FreeTaxUSA (2024)

FAQs

How do I report I bond interest on tax return TurboTax? ›

You'll have to make up a 1099 form for the tax software. Use the Savings Bond Calculator to calculate the change in redemption value for each bond from the prior December to last December. Track each bond in a spreadsheet. Report the total change as your interest for the year in Box 3 of the made-up 1099-INT.

How do you report interest on your tax return? The interest on your I bond falls on the same line as other interest income whether you choose to report it every year or all at once at the end of your ownership. Interest the bond earns is reported on a 1099-INT after the bond is cashed or reissued.

Typically, interest from corporate bonds will be in Box 1, interest from U.S. Treasuries will be in Box 3, and tax-exempt interest from muni bonds will be in Box 8. Even if you don't have to pay income tax on the interest, you still need to include it on your tax return.

You can designate up to $5,000 of your federal refund toward up to three Series I bonds, which will be mailed to the address on the your return. You'll see the option to purchase bonds when you get to How would you like to receive your federal refund? in the File section.

Form 1099-INT

Box 1: Interest income — Enter this amount on Form 1040 or on Schedule B (if required). It's taxable as ordinary income. Box 2: Early withdrawal penalty — This amount is charged when you withdraw a time investment, like a CD, early. Enter this amount as an adjustment to income on Form 1040, Line 30.

If you invest in TreasuryDirect, your 1099 will be available electronically and you can print the form from your account. 1099 forms are available by January 31 of each tax year.

Interest income from Treasury bills, notes and bonds - This interest is subject to federal income tax, but is exempt from all state and local income taxes.

To qualify for the exclusion, the bonds must be series EE or I U.S. savings bonds issued after 1989 in your name, or, if you are married, they may be issued in your name and your spouse's name. Also, you must have been age 24 or older before the bonds were issued.

If a financial institution pays the bond, you get a 1099-INT from that financial institution either soon after you cash your bond or by January 31 of the following year. If your bonds are in your TreasuryDirect account, your 1099-INT is available in your account by January 31 of the following year.

How is bond interest taxed? ›

Interest from Treasuries is generally taxable at the federal level, but not at the state level. Interest from munis is generally exempt from federal taxes, and if you live in the state where the bond was issued, the interest may also be exempt from state taxes.

If you want to import your form, search for your brokerage or financial institution. Sign in to your online account and select Get my form. If you want to upload a copy of your form or manually enter the info, select Enter a different way, and follow the instructions to enter your 1099-INT.

Holding I Bonds until maturity

You would report the interest on line 2b of Form 1040 and attach Schedule B if you earned $1,500 or more of interest. If you do cash the bonds in during the year they mature, and you used the bonds proceeds to pay for higher education, some of the interest may be exempt (see below).

Use Form 8888 to tell the IRS you want to: Buying Series I Savings Bonds • Split your refund with direct deposits into two or three checking or savings accounts • Receive your refund as a paper check in the mail.

The interest earned by purchasing and holding savings bonds is subject to federal tax at the time the bonds are redeemed. However, interest earned on savings bonds is not taxable at the state or local level.

You can exclude the interest from your series EE and series I U.S. savings bonds on Form 8815 of the 1040. Form 8815 helps calculate the amount of interest that you can exclude from your tax return. If all the interest was not used for a qualified higher education expense you will stay pay taxes on that amount.

If you have accrued interest, you should receive a 1099-INT from the IRS for each of the bonds that you held that provided at least $10 in interest. The total interest amount will include the accrued interest that is taxable to both the seller and the purchaser.