Accrued Interest Paid by the purchaser on U.S. Treasury Notes and Bonds

Forum|Forum|1 year ago
February 17, 2025
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Regarding my 2024 federal tax return, when entering "accrued interest paid on purchases" pertaining to U.S. Treasury Bonds and Notes, as the purchaser, do I use the following from the 2024 Turbo Tax Deluxe drop down menu to explain why I am reducing the amount of interest paid on the treasuries, "My accrued interest is included in this 1099 INT"? If not, which one from the drop-down menu should I use?

Please note, I have already put the interest received from the treasuries in its own dedicated 1099 INT in Turbo Tax, therefore, there will be no comingling of the interest reduction among other types of interest earnings (i.e., CDs, etc.).

I look forward to a reply. Bill 452

I look

Best answer by SteamTrain

@Bill452

Yes...as long as that 1099-INT ONLY has box 3 (and maybe box 11 12) $$ reported on it.

With a qualification......you are only supposed to claim the accrued interest you paid to the seller, only if you received interest from that bond during 2024.

So you may have $$ you received in box 3 from some, but not all of the Treasuries you bought in 2024.

Thus a US bond/note you may have bought in November, that didn't pay out interest to you until (say) Feb of 2025??? For those you'd have to wait until 2025 taxes to claim the Accrued interest you paid to buy the US bond/note.

RobertB4444

Yes, that drop down will tell the program what interest is there for US treasuries.

@Bill452

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Bill452Author

Thank you for your response. However, your response is unclear. As stated in my original post above, my question is fairly simple, I had “accrued interest paid on purchases” pertaining to U.S. Treasury Bonds and Notes that I need to deduct from box 3 (Interest on treasury obligations) of my 1099 INT so that I am not taxed on the accrued interest that I paid the seller at the time I purchased the treasury obligations on the secondary market.

In Turbo Tax Deluxe when entering the information pertaining to the 1099 INT under “Tell us about your interest adjustment” there is a drop-down menu titled “Reason for adjustment” which only has two plausible reasons to use for my situation. The first is “"My accrued interest is included in this 1099 INT" and the second is “Other reasons”. I believe that I would use the first, “My accrued interest is included in this 1099 INT”, for the reason for adjustment. Do you concur?

SteamTrainAnswer

Employee

@Bill452

Yes...as long as that 1099-INT ONLY has box 3 (and maybe box 11 12) $$ reported on it.

With a qualification......you are only supposed to claim the accrued interest you paid to the seller, only if you received interest from that bond during 2024.

So you may have $$ you received in box 3 from some, but not all of the Treasuries you bought in 2024.

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*