Paying tax on Savings Bond interest with no 1099-INT

Forum|Forum|6 years ago
February 10, 2020
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Hi, I'm preparing the final return for my mother who passed in 2019. I inherited several EE Savings Bonds from her, but they have not been redeemed yet, so there is no 1099-INT form from the government to use.

I would like to pay taxes on all the interest that accrued thru my mother's death. Then when I redeem the bonds in a couple years, I'll only have to pay taxes on a few years worth of interest that accrued since her passing.

What is the proper way to document this in TurboTax? Thanks!

DavidS127

To report the interest on the savings bond each year in TurboTax:

Click the "magnifying glass Search" icon on the top row;
Enter "savings bond interest" in the search window and hit return or enter;
Click on the "Go to 1099-INT" button in the "Where do I enter my 1099-INT";
Enter the information in the TurboTax boxes as if you had received a 1099-INT.

You report the amount all interest earned to date, unless previously reported, on your mother's final return. In fact, if the bonds are re-issued in your name, you must report the interest that way.

See IRS Publication 550 for the details on reporting US savings bond interest. It includes these instructions for how to report the 1099-INT you will receive when the bond is redeemed (i.e., when you ultimately receive the 1099-INT for the savings bonds):

"On Schedule B (Form 1040), Part I, line 1, report all the interest shown on your Form 1099-INT. Then follow these steps.

Several lines above line 2, enter a subtotal of all interest listed on line 1.
Below the subtotal enter "U.S. Savings Bond Interest Previously Reported" and enter amounts previously reported or interest accrued before you received the bond.
Subtract these amounts from the subtotal and enter the result on line 2."

Note that TurboTax will do this for you, if you select the "I need to adjust the interest reported on my form" box, on the screen after you enter the 1099-INT.

This US Treasury website has a good summary of the taxation of savings bond interest.

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msarcherAuthor

Thanks David!

Couple follow-ups after playing around with TurboTax.

1. What do I put in "Received from" - the first box?

2. What do I put for payer's Federal ID Number (FEIN)?

3. The bonds were originally my grandfather's and the accrued interest was paid on his death. So I put in the full interest amount and then entered an adjustment amount equal to the interest that was taxed on my grandfather's final return. Is that correct? After re-reading your post, I see you wrote "You report the amount all interest earned to date, unless previously reported, on your mother's final return. "

Can you clarify the best way to handle this situation?

Thanks again!