Guide to Reporting U.S. Savings Bond Interest Income on Your Taxes- What You Need to Know

How do I report U.S. savings bond interest on taxes?

Reporting U.S. savings bond interest on taxes is an important task for bondholders, as it ensures compliance with the Internal Revenue Service (IRS) regulations. Interest earned on savings bonds is taxable income, and it must be reported on your tax return. In this article, we will provide a step-by-step guide on how to report U.S. savings bond interest on taxes.

Understanding Savings Bond Interest

Before we dive into the reporting process, it is essential to understand that interest earned on U.S. savings bonds is taxable. This includes Series EE, Series I, and Series HH bonds. The interest is subject to federal income tax and, in some cases, state income tax. However, the interest is exempt from federal income tax if used to pay for qualified higher education expenses.

Steps to Report Savings Bond Interest on Taxes

1.

Locate Your Savings Bond Interest Statement

The first step in reporting savings bond interest is to locate your annual interest statement. The Treasury Department sends this statement, known as Form 1099-INT, to bondholders by January 31 of the following year. If you have not received your statement, you can access it online through the TreasuryDirect website.

2.

Review the Form 1099-INT

Once you have your Form 1099-INT, review the information provided. It should include the total interest earned on your savings bonds during the tax year and any taxes withheld. Make sure the information matches your records.

3.

Report the Interest on Your Tax Return

To report the interest on your tax return, you will need to use Form 1040 or Form 1040-SR. If you are using Form 1040, enter the total interest earned from savings bonds on line 8b. If you are using Form 1040-SR, enter the interest on line 8b.

4.

Check for Exemptions

If you used the interest to pay for qualified higher education expenses, you may be eligible for an exclusion. To claim this exclusion, you must complete Form 8815, “Exclusion of Interest from Tax on Qualified Higher Education Expenses.” Attach this form to your tax return.

5.

State Tax Filing

If you are required to file a state income tax return, you may also need to report the interest earned on your savings bonds. Check your state’s tax guidelines to determine if and how you should report the interest.

Additional Tips

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Keep Accurate Records

Maintaining accurate records of your savings bonds and their interest earnings can help you easily report the income on your tax return.

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Use Online Resources

The TreasuryDirect website offers valuable resources, including a Savings Bond Calculator and a guide on reporting interest on taxes.

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Seek Professional Help

If you are unsure about how to report your savings bond interest or have questions about your tax return, consider consulting a tax professional.

By following these steps, you can ensure that you correctly report U.S. savings bond interest on your taxes. Remember, accurate reporting is crucial for complying with IRS regulations and avoiding potential penalties.