1099 for I-Bonds

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almeida
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1099 for I-Bonds

Post by almeida »

Hello. I bought I Bonds for the first time this past year. I just received an email from TreasuryDirect about a 1099. They told me to check my Investor InBox for important tax information, so I did, but I don't see any forms. The purchases were in June, September, December, so they are all under a year old. Should I get a 1099 for 2013? Thanks.
Retread
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Re: 1099 for I-Bonds

Post by Retread »

I don't know why you would receive a 1099. There's nothing taxable to you.
Bruce
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sscritic
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Re: 1099 for I-Bonds

Post by sscritic »

Maybe, maybe not. If you pay your taxes each year, you figure out the increase on your own and report it. Whether you report annually or not, you get a 1099 at maturity or redemption. If you have already reported some of that interest, you report it as already reported when you report your interest on your tax return. [Sorry, I couldn't help it :) ]
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HueyLD
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Re: 1099 for I-Bonds

Post by HueyLD »

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Last edited by HueyLD on Sun Feb 08, 2015 4:04 am, edited 1 time in total.
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Dutch
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Re: 1099 for I-Bonds

Post by Dutch »

No, you won't get a 1099 for your I bond purchase.
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Mel Lindauer
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Re: 1099 for I-Bonds

Post by Mel Lindauer »

HueyLD wrote:
sscritic wrote:Maybe, maybe not. If you pay your taxes each year, you figure out the increase on your own and report it. Whether you report annually or not, you get a 1099 at maturity or redemption. If you have already reported some of that interest, you report it as already reported when you report your interest on your tax return. [Sorry, I couldn't help it :) ]
Your reply is too complicated for my pay grade. :) Please clarify for the OP.
I know you understand what he said, HueyLD, but for the OP, here goes:

You have the option to report your earned interest annually, if you choose to do so because it's more beneficial to you. The default method is tax-deferred until redeemed. If you do choose to report your interest annually, you'll have to report that fact on your income tax return at redemption time since you'll get a 1099 for the full amount of interest the bond has earned over its lifetime.
Best Regards - Mel | | Semper Fi
sscritic
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Re: 1099 for I-Bonds

Post by sscritic »

This is a special post in response to the request made by my friend HueyLD.

The details are in Publication 550, Investment Income and Expenses.
http://www.irs.gov/pub/irs-pdf/p550.pdf

See Chapter 1 Investment Income. There are several sections related to Savings Bonds. In order, with page references:

page 7
Accrual method taxpayers. If you use an accrual method of accounting, you must report interest on U.S. savings bonds each year as it accrues. You cannot postpone reporting interest until you receive it or until the bonds mature.

Cash method taxpayers. If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U.S. savings bonds when you receive it. But see Reporting options for cash method taxpay­ers, later.
page 8
Reporting options for cash method taxpayers. If you use the cash method of reporting income, you can report the interest on series EE, series E, and series I bonds in either of the following ways
  • 1. Method 1. Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year in which they mature. (However, see Savings bonds traded, later.) Note. Series EE bonds issued in 1983 matured in 2013. If you have used method 1, you generally must report the interest on these bonds on your 2013 return. The last series E bonds were issued in 1980 and matured in 2010. If you used method 1, you generally should have reported the interest on these bonds on your 2010 return

    2. Method 2. Choose to report the increase in redemption value as interest each year.
You must use the same method for all series EE, series E, and series I bonds you own. If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1.
page 8 also tells you how to change from method 1 to method 2 or from method 2 to method 1. There is also a bunch of stuff about children and dead people* which I will skip over, but it does make for fascinating reading.

Skipping ahead to page 17 on how to report what you have already reported.
U.S. savings bond interest previously re­ported. If you received a Form 1099-INT for U.S. savings bond interest, the form may show interest you do not have to report. See Form 1099­INT for U.S. savings bond interest under U.S. Savings Bonds, earlier.

On Schedule B (Form 1040A or 1040), Part I, line 1, report all the interest shown on your Form 1099-INT. Then follow these steps.
  • 1. Several lines above line 2, enter a subtotal of all interest listed on line 1.
    2. Below the subtotal enter “U.S. Savings Bond Interest Previously Reported” and enter amounts previously reported or interest accrued before you received the bond.
    3. Subtract these amounts from the subtotal and enter the result on line 2.
* There are two types of dead people: dead people who have previously reported and dead people who have not.
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JamesSFO
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Re: 1099 for I-Bonds

Post by JamesSFO »

almeida wrote:Hello. I bought I Bonds for the first time this past year. I just received an email from TreasuryDirect about a 1099. They told me to check my Investor InBox for important tax information, so I did, but I don't see any forms. The purchases were in June, September, December, so they are all under a year old. Should I get a 1099 for 2013? Thanks.
Probably not but you can look at your account and check:

Image
Topic Author
almeida
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Re: 1099 for I-Bonds

Post by almeida »

Thanks guys. My account says I have no taxable transactions. Is accrual method vs. cash method an option at purchase time or something I decide at tax time? If I go through the purchase process now, I don't see any tax options, but maybe I picked it for the first bond and it stuck for the second and third?
sscritic
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Re: 1099 for I-Bonds

Post by sscritic »

almeida wrote:Thanks guys. My account says I have no taxable transactions. Is accrual method vs. cash method an option at purchase time or something I decide at tax time? If I go through the purchase process now, I don't see any tax options, but maybe I picked it for the first bond and it stuck for the second and third?
No. Most normal people pay taxes as cash method taxpayers. You do have a choice whether to report or not report your interest each year when you fill out your taxes, but there are rules on how to switch from reporting to deferring or deferring to reporting. I could give you a link to publication 550, but I already did that.

See pub 538 for cash vs accrual. My limited knowledge is that accrual is for some small businesses, who do things like presell (e.g., collect money today for a service to be performed over the next 24 months).
Most individuals and many small businesses use the cash method of accounting.
I have no idea what this means for an accrual method taxpayer (unless I were to spend the time to read it)
Generally, you report an advance payment for services to be performed in a later tax year as income in the year you receive the payment. However, if you receive an advance payment for services you agree to perform by the end of the next tax year, you can elect to postpone including the advance payment in income until the next tax year. However, you cannot postpone including any payment beyond that tax year.

Service agreement. You can postpone reporting income from an advance payment you receive for a service agreement on property you sell, lease, build, install, or construct. This includes an agreement providing for incidental replacement of parts or materials. However, this applies only if you offer the property without a service agreement in the normal course of business.
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Rob5TCP
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Re: 1099 for I-Bonds

Post by Rob5TCP »

JamesSFO wrote:
almeida wrote:Hello. I bought I Bonds for the first time this past year. I just received an email from TreasuryDirect about a 1099. They told me to check my Investor InBox for important tax information, so I did, but I don't see any forms. The purchases were in June, September, December, so they are all under a year old. Should I get a 1099 for 2013? Thanks.
Probably not but you can look at your account and check:

Image
Thank you - couldn't find my 1099. Thought it was for 2013, but it seems the transaction was recorded 1-02-2014.
sscritic
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Re: 1099 for I-Bonds

Post by sscritic »

Where do you go for your paper I bonds? I can't find them at TD.

[joke]
sscritic
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Re: 1099 for I-Bonds

Post by sscritic »

Rob5TCP wrote: Thank you - couldn't find my 1099. Thought it was for 2013, but it seems the transaction was recorded 1-02-2014.
Yes, if you redeemed your bond on January 2, 2014, you probably won't see your 1099 until 2015. Note: TD will not mail you a 1099; the only version you get is the one on the website.
For your convenience, we provide the printable IRS Form 1099 on or before January 31 of the selected tax year. This form complies with all Internal Revenue Service regulations. It includes entries, when applicable, that are reportable on Forms 1099-INT, 1099-B, and 1099-OID. We display our (the Payer's) Federal Identification Number. We also display the name and address of Account Holder, TreasuryDirect Account Number, and Taxpayer Identification Number. Any partial or full redemptions and/or transfers and interest/maturity payments are listed as reportable tax events for the selected tax year.
Will I get a form for my taxes?
Yes. IRS Form 1099-INT is provided for redeemed bonds. The form may be available when you redeem your bond or after the end of the tax year.

Electronic bonds
Log in to TreasuryDirect and go to ManageDirect. Form 1099-INT is one of the links on the ManageDirect page.

Paper bonds
The financial institution where you redeemed the bond will mail the form to the address on record for the bond owner.
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