Your Form 1099-INT for interest earned from I Bonds must be downloaded directly on the Treasury Direct website and is not sent in the mail. The process also works differently than all other bank-issued 1099 forms out there.
We mentioned this briefly in our main 1099 page for 2023, and a reader mentioned this as something worth highlighting given its broad impact among our readers.
To find your 1099: login at Treasurydirect.gov > choose the ManageDirect tab > Manage My Taxes, choose year 2023 > choose ‘View your 1099 for tax year 2023’.
There will be a page detailing your earned interest for the 2023 calendar year. It won’t be in the standard pdf format like most banks do – simply print out or save that page of information, as you would with any other 1099. Below is the video from the IRS website describing the process:
All of the interest is typically reported in the year you cashed-out the I Bond. Also worth noting that I Bonds and US Treasuries only pay federal taxes; they are exempt from state and local taxes.
I cashed out my bonds and put the interests in a 529 for the tax exemption. I guess I’ll figure out how this all works when I file next weekend.
Literally just went to check on my I-bonds and clicked on a bond and pressed “Edit” to see what it would do and got my account locked. What the heck.
“You have made too many invalid entries and your account has been locked. Please contact us at (844) 284-2676.”
Lol, its like playing minesweeper trying to navigate that site.
Awful site. Wish I never chased after that Inflation $$
DOC,
Change language above, pls. You wrote: Also worth noting that I Bonds and US Treasuries only pay federal taxes;
That is wrong.
I highly recommend avoiding Treasurydirect for all purchases……bonds, bills, notes, etc…Go with a brokerage firm. There is no upside with TD. Yes I understand this means no savings or I bonds…..the risk is not worth any benefit nor the hassle IMHO and there are alternatives. TD simply does not have the process capability to provide any level of customer service in a timely manner should you encounter an issue.. I got locked out of my account and was told it would take at least 6 months to unlocked it. Its now been 9 months and TD can not provide when or if they will ever be able to unlock it. There is no where to elevated. 1099’s are therefore not available….for anything purchased at TD….bonds, bills,etc. I’m writing off the Ibond purchase as a loss on this years taxes. Should I get access to the bonds in the future I’ll file an amended return. The good news is maturing bills(not Ibonds or savings bonds) still get automatically deposited back into your designated financial institution…..contrary to what TD indicated. Maturing Ibonds and savings bonds would still be locked and unavailable until the account is unlock. I’ve concluded that a lifetime of purchasing hundreds of savings bonds through my working career has not only been the worst investment but the most hassle. A terrible experience
You cannot claim an unrealized loss on your taxes because of perceived login issues in a random tax year wtf? That’s one way to incur an accuracy related penalty. I forgot my login details AND my security questions and they unlocked me in a 6 minute phone call..
Note that I-bonds also have a tax exemption for students
…as long as the bond owner pays qualified education expenses at an eligible educational institution
Yes, there are lots of caveats. Room&board are not eligible expenses, the maximum that can be excluded is reduced by any non-taxable scholarships/grants, the bond owner must have been at least 24 when the bonds were purchased (so don’t put your kids name on them).
Worst/weirdest one is, if your expenses are less than the total of all proceeds (principal AND interest) from all bonds redeemed, the amount of interest you can exclude is reduced by the ratio of expenses to total proceeds. So if you had 10k in tuition payments and 40k worth of I bonds of which 10k is interest, you wouldn’t want to redeem all 40k in that year.
https://www.irs.gov/pub/irs-pdf/f8815.pdf
Of course I’ve already filed my tax report for 2023 and forgot about all this…
Yeah, me too. How much trouble are we in?
You’re going to be arrested unless you send $5,000 in Google Play gift cards to me, the FBI
I am an American with RIGHTS!! You can’t blackmail me FBI <looks over shoulder>
https://tenor.com/view/fbi-open-up-raid-gif-12547488
I wish I could post the gif here.
I’m still not scared! I will fight for my right to …. par.. I mean umm ..
I will need this if I cashed-out the I-bond, right? If I haven’t done anything since buying the bond on “05-01-2022”, I don’t have to do anything yet?
I’m seeing “Year 2023 (No taxable transactions)” on that page.
If you bought on 5/1/22 you presumably sold on 2/1/24, right?
If so you don’t have to do anything until 2024. But you can if you want to.
Read my post immediately below.
No, I didn’t sell. I didn’t do anything with it after buying. I had read somewhere that “if you cash in the bond in less than 5 years, you lose the last 3 months of interest.” So, I thought I’ll leave it alone for 5 years.
True, if you sell now you lose 3 months of 3.97% interest. But you still come out ahead.
If you want to keep it, you should swap it for a new one anyway. You’ll get an extra 1.30% for as long as you hold it (5.27% now instead of 3.97%).
And if you sell on 3/1 you’ll only lose 2 months (because on 3/1 you get credited for the full month of March).
If you buy the replacement before 2/29 you’ll get credit for the full month of February at 5.27%. (If you can’t float the 10k for a few days, just buy the new one at the end of March instead).
You’ll recoup the lost interest in 8 months at worst, or under 6 months if you time it right. After that you’re ahead by 1.3% for 29+ more years or until you sell.
I sold in January 2024 and had planned to defer the tax until 2024. So I did not report the interest in 2022. Unfortunately (haha) my income will be higher in 2024, which was unexpected.
So I want to switch retroactively. I checked the IRS site and yes, you can do this! Per IRS:
You can change from one reporting method to the other.
1.You were deferring. You now want to report every year.
You may do this without permission from the IRS.
But you must do this for all the savings bonds for the Social Security Number whose tax return this is. In addition to the interest for the year you are now reporting, you must also report all interest those bonds earned in the years before you changed.
2. You were reporting each year. You now want to defer the interest.
You must fill out IRS Form 3115 or follow the instructions in IRS Publication 550 in the section on U.S. Savings Bonds.
Doing it retroactively may entail amending my 2022 return. Possibly not worth it but I’ll test it both ways.
I was going to say…do you have to file an amended return? Is there any chance of somehow incurring an underpayment penalty? What if you cross some other income-tested boundary? (For most people, this would not be a large sum, but it could be…)
If you do this you have to report the interest annually on every savings bond attached to your SSN going forward. It’s possible to switch back to deferring the interest but only if you request and the IRS approves it. I’m sure you’ve read this given you’re familiar with form 3115 and pub 550 though 😀
There was no mention of Interest Penalty. Was it automatically deducted or something?
yes
wow
I totally forgot about the iBonds.
Good reminder.