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1040x Tax Return For Prior Year Instructions

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1040x Tax Return For Prior Year Instructions

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The 1040x Tax Return For Prior Year Instructions

1040x tax return for prior year instructions 7. 1040x tax return for prior year instructions   Interest Income Table of Contents Reminder Introduction Useful Items - You may want to see: General InformationSSN for joint account. 1040x tax return for prior year instructions Custodian account for your child. 1040x tax return for prior year instructions Penalty for failure to supply SSN. 1040x tax return for prior year instructions Reporting backup withholding. 1040x tax return for prior year instructions Savings account with parent as trustee. 1040x tax return for prior year instructions Interest not reported on Form 1099-INT. 1040x tax return for prior year instructions Nominees. 1040x tax return for prior year instructions Incorrect amount. 1040x tax return for prior year instructions Information reporting requirement. 1040x tax return for prior year instructions Taxable InterestInterest subject to penalty for early withdrawal. 1040x tax return for prior year instructions Money borrowed to invest in certificate of deposit. 1040x tax return for prior year instructions U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Savings Bonds Education Savings Bond Program U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Treasury Bills, Notes, and Bonds Bonds Sold Between Interest Dates Insurance State or Local Government Obligations Original Issue Discount (OID) When To Report Interest IncomeConstructive receipt. 1040x tax return for prior year instructions How To Report Interest IncomeSchedule B (Form 1040A or 1040). 1040x tax return for prior year instructions Reporting tax-exempt interest. 1040x tax return for prior year instructions U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bond interest previously reported. 1040x tax return for prior year instructions Reminder Foreign-source income. 1040x tax return for prior year instructions  If you are a U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions citizen with interest income from sources outside the United States (foreign income), you must report that income on your tax return unless it is exempt by U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions law. 1040x tax return for prior year instructions This is true whether you reside inside or outside the United States and whether or not you receive a Form 1099 from the foreign payer. 1040x tax return for prior year instructions Introduction This chapter discusses the following topics. 1040x tax return for prior year instructions Different types of interest income. 1040x tax return for prior year instructions What interest is taxable and what interest is nontaxable. 1040x tax return for prior year instructions When to report interest income. 1040x tax return for prior year instructions How to report interest income on your tax return. 1040x tax return for prior year instructions In general, any interest you receive or that is credited to your account and can be withdrawn is taxable income. 1040x tax return for prior year instructions Exceptions to this rule are discussed later in this chapter. 1040x tax return for prior year instructions You may be able to deduct expenses you have in earning this income on Schedule A (Form 1040) if you itemize your deductions. 1040x tax return for prior year instructions See Money borrowed to invest in certificate of deposit , later, and chapter 28. 1040x tax return for prior year instructions Useful Items - You may want to see: Publication 537 Installment Sales 550 Investment Income and Expenses 1212 Guide to Original Issue Discount (OID) Instruments Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends 8815 Exclusion of Interest From Series EE and I U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Savings Bonds Issued After 1989 8818 Optional Form To Record Redemption of Series EE and I U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Savings Bonds Issued After 1989 General Information A few items of general interest are covered here. 1040x tax return for prior year instructions Recordkeeping. 1040x tax return for prior year instructions You should keep a list showing sources and interest amounts received during the year. 1040x tax return for prior year instructions Also, keep the forms you receive showing your interest income (Forms 1099-INT, for example) as an important part of your records. 1040x tax return for prior year instructions Tax on unearned income of certain children. 1040x tax return for prior year instructions    Part of a child's 2013 unearned income may be taxed at the parent's tax rate. 1040x tax return for prior year instructions If so, Form 8615, Tax for Certain Children Who Have Unearned Income, must be completed and attached to the child's tax return. 1040x tax return for prior year instructions If not, Form 8615 is not required and the child's income is taxed at his or her own tax rate. 1040x tax return for prior year instructions   Some parents can choose to include the child's interest and dividends on the parent's return. 1040x tax return for prior year instructions If you can, use Form 8814, Parents' Election To Report Child's Interest and Dividends, for this purpose. 1040x tax return for prior year instructions   For more information about the tax on unearned income of children and the parents' election, see chapter 31. 1040x tax return for prior year instructions Beneficiary of an estate or trust. 1040x tax return for prior year instructions   Interest you receive as a beneficiary of an estate or trust is generally taxable income. 1040x tax return for prior year instructions You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. 1040x tax return for prior year instructions , from the fiduciary. 1040x tax return for prior year instructions Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. 1040x tax return for prior year instructions Social security number (SSN). 1040x tax return for prior year instructions   You must give your name and SSN or individual tax identification number (ITIN) to any person required by federal tax law to make a return, statement, or other document that relates to you. 1040x tax return for prior year instructions This includes payers of interest. 1040x tax return for prior year instructions If you do not give your SSN or ITIN to the payer of interest, you may have to pay a penalty. 1040x tax return for prior year instructions SSN for joint account. 1040x tax return for prior year instructions   If the funds in a joint account belong to one person, list that person's name first on the account and give that person's SSN to the payer. 1040x tax return for prior year instructions (For information on who owns the funds in a joint account, see Joint accounts , later. 1040x tax return for prior year instructions ) If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account. 1040x tax return for prior year instructions This is because only one name and SSN can be shown on Form 1099. 1040x tax return for prior year instructions   These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. 1040x tax return for prior year instructions For example, if you open a joint savings account with your child using funds belonging to the child, list the child's name first on the account and give the child's SSN. 1040x tax return for prior year instructions Custodian account for your child. 1040x tax return for prior year instructions   If your child is the actual owner of an account that is recorded in your name as custodian for the child, give the child's SSN to the payer. 1040x tax return for prior year instructions For example, you must give your child's SSN to the payer of interest on an account owned by your child, even though the interest is paid to you as custodian. 1040x tax return for prior year instructions Penalty for failure to supply SSN. 1040x tax return for prior year instructions   If you do not give your SSN to the payer of interest, you may have to pay a penalty. 1040x tax return for prior year instructions See Failure to supply SSN under Penalties in chapter 1. 1040x tax return for prior year instructions Backup withholding also may apply. 1040x tax return for prior year instructions Backup withholding. 1040x tax return for prior year instructions   Your interest income is generally not subject to regular withholding. 1040x tax return for prior year instructions However, it may be subject to backup withholding to ensure that income tax is collected on the income. 1040x tax return for prior year instructions Under backup withholding, the payer of interest must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. 1040x tax return for prior year instructions   Backup withholding may also be required if the IRS has determined that you underreported your interest or dividend income. 1040x tax return for prior year instructions For more information, see Backup Withholding in chapter 4. 1040x tax return for prior year instructions Reporting backup withholding. 1040x tax return for prior year instructions   If backup withholding is deducted from your interest income, the payer must give you a Form 1099-INT for the year indicating the amount withheld. 1040x tax return for prior year instructions The Form 1099-INT will show any backup withholding as “Federal income tax withheld. 1040x tax return for prior year instructions ” Joint accounts. 1040x tax return for prior year instructions   If two or more persons hold property (such as a savings account or bond) as joint tenants, tenants by the entirety, or tenants in common, each person's share of any interest from the property is determined by local law. 1040x tax return for prior year instructions Income from property given to a child. 1040x tax return for prior year instructions   Property you give as a parent to your child under the Model Gifts of Securities to Minors Act, the Uniform Gifts to Minors Act, or any similar law becomes the child's property. 1040x tax return for prior year instructions   Income from the property is taxable to the child, except that any part used to satisfy a legal obligation to support the child is taxable to the parent or guardian having that legal obligation. 1040x tax return for prior year instructions Savings account with parent as trustee. 1040x tax return for prior year instructions   Interest income from a savings account opened for a minor child, but placed in the name and subject to the order of the parents as trustees, is taxable to the child if, under the law of the state in which the child resides, both of the following are true. 1040x tax return for prior year instructions The savings account legally belongs to the child. 1040x tax return for prior year instructions The parents are not legally permitted to use any of the funds to support the child. 1040x tax return for prior year instructions Form 1099-INT. 1040x tax return for prior year instructions   Interest income is generally reported to you on Form 1099-INT, or a similar statement, by banks, savings and loans, and other payers of interest. 1040x tax return for prior year instructions This form shows you the interest you received during the year. 1040x tax return for prior year instructions Keep this form for your records. 1040x tax return for prior year instructions You do not have to attach it to your tax return. 1040x tax return for prior year instructions   Report on your tax return the total interest income you receive for the tax year. 1040x tax return for prior year instructions Interest not reported on Form 1099-INT. 1040x tax return for prior year instructions   Even if you do not receive Form 1099-INT, you must still report all of your interest income. 1040x tax return for prior year instructions For example, you may receive distributive shares of interest from partnerships or S corporations. 1040x tax return for prior year instructions This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deduction, Credits, etc. 1040x tax return for prior year instructions , or Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. 1040x tax return for prior year instructions Nominees. 1040x tax return for prior year instructions   Generally, if someone receives interest as a nominee for you, that person must give you a Form 1099-INT showing the interest received on your behalf. 1040x tax return for prior year instructions   If you receive a Form 1099-INT that includes amounts belonging to another person, see the discussion on nominee distributions under How To Report Interest Income in chapter 1 of Publication 550, or Schedule B (Form 1040A or 1040) instructions. 1040x tax return for prior year instructions Incorrect amount. 1040x tax return for prior year instructions   If you receive a Form 1099-INT that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. 1040x tax return for prior year instructions The new Form 1099-INT you receive will be marked “Corrected. 1040x tax return for prior year instructions ” Form 1099-OID. 1040x tax return for prior year instructions   Reportable interest income also may be shown on Form 1099-OID, Original Issue Discount. 1040x tax return for prior year instructions For more information about amounts shown on this form, see Original Issue Discount (OID) , later in this chapter. 1040x tax return for prior year instructions Exempt-interest dividends. 1040x tax return for prior year instructions   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. 1040x tax return for prior year instructions (However, see Information reporting requirement , next. 1040x tax return for prior year instructions ) Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. 1040x tax return for prior year instructions You do not reduce your basis for distributions that are exempt-interest dividends. 1040x tax return for prior year instructions Information reporting requirement. 1040x tax return for prior year instructions   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file. 1040x tax return for prior year instructions This is an information reporting requirement and does not change the exempt-interest dividends into taxable income. 1040x tax return for prior year instructions Note. 1040x tax return for prior year instructions Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. 1040x tax return for prior year instructions See Alternative Minimum Tax (AMT) in chapter 30 for more information. 1040x tax return for prior year instructions Chapter 1 of Publication 550 contains a discussion on private activity bonds under State or Local Government Obligations. 1040x tax return for prior year instructions Interest on VA dividends. 1040x tax return for prior year instructions   Interest on insurance dividends left on deposit with the Department of Veterans Affairs (VA) is not taxable. 1040x tax return for prior year instructions This includes interest paid on dividends on converted United States Government Life Insurance and on National Service Life Insurance policies. 1040x tax return for prior year instructions Individual retirement arrangements (IRAs). 1040x tax return for prior year instructions   Interest on a Roth IRA generally is not taxable. 1040x tax return for prior year instructions Interest on a traditional IRA is tax deferred. 1040x tax return for prior year instructions You generally do not include it in your income until you make withdrawals from the IRA. 1040x tax return for prior year instructions See chapter 17. 1040x tax return for prior year instructions Taxable Interest Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. 1040x tax return for prior year instructions The following are some sources of taxable interest. 1040x tax return for prior year instructions Dividends that are actually interest. 1040x tax return for prior year instructions   Certain distributions commonly called dividends are actually interest. 1040x tax return for prior year instructions You must report as interest so-called “dividends” on deposits or on share accounts in: Cooperative banks, Credit unions, Domestic building and loan associations, Domestic savings and loan associations, Federal savings and loan associations, and Mutual savings banks. 1040x tax return for prior year instructions  The “dividends” will be shown as interest income on Form 1099-INT. 1040x tax return for prior year instructions Money market funds. 1040x tax return for prior year instructions   Money market funds pay dividends and are offered by nonbank financial institutions, such as mutual funds and stock brokerage houses. 1040x tax return for prior year instructions Generally, amounts you receive from money market funds should be reported as dividends, not as interest. 1040x tax return for prior year instructions Certificates of deposit and other deferred interest accounts. 1040x tax return for prior year instructions   If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. 1040x tax return for prior year instructions You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. 1040x tax return for prior year instructions The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. 1040x tax return for prior year instructions If interest is deferred for more than 1 year, see Original Issue Discount (OID) , later. 1040x tax return for prior year instructions Interest subject to penalty for early withdrawal. 1040x tax return for prior year instructions   If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. 1040x tax return for prior year instructions You must report the total amount of interest paid or credited to your account during the year, without subtracting the penalty. 1040x tax return for prior year instructions See Penalty on early withdrawal of savings in chapter 1 of Publication 550 for more information on how to report the interest and deduct the penalty. 1040x tax return for prior year instructions Money borrowed to invest in certificate of deposit. 1040x tax return for prior year instructions   The interest you pay on money borrowed from a bank or savings institution to meet the minimum deposit required for a certificate of deposit from the institution and the interest you earn on the certificate are two separate items. 1040x tax return for prior year instructions You must report the total interest you earn on the certificate in your income. 1040x tax return for prior year instructions If you itemize deductions, you can deduct the interest you pay as investment interest, up to the amount of your net investment income. 1040x tax return for prior year instructions See Interest Expenses in chapter 3 of Publication 550. 1040x tax return for prior year instructions Example. 1040x tax return for prior year instructions You deposited $5,000 with a bank and borrowed $5,000 from the bank to make up the $10,000 minimum deposit required to buy a 6-month certificate of deposit. 1040x tax return for prior year instructions The certificate earned $575 at maturity in 2013, but you received only $265, which represented the $575 you earned minus $310 interest charged on your $5,000 loan. 1040x tax return for prior year instructions The bank gives you a Form 1099-INT for 2013 showing the $575 interest you earned. 1040x tax return for prior year instructions The bank also gives you a statement showing that you paid $310 interest for 2013. 1040x tax return for prior year instructions You must include the $575 in your income. 1040x tax return for prior year instructions If you itemize your deductions on Schedule A (Form 1040), you can deduct $310, subject to the net investment income limit. 1040x tax return for prior year instructions Gift for opening account. 1040x tax return for prior year instructions   If you receive noncash gifts or services for making deposits or for opening an account in a savings institution, you may have to report the value as interest. 1040x tax return for prior year instructions   For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. 1040x tax return for prior year instructions For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. 1040x tax return for prior year instructions The value is determined by the cost to the financial institution. 1040x tax return for prior year instructions Example. 1040x tax return for prior year instructions You open a savings account at your local bank and deposit $800. 1040x tax return for prior year instructions The account earns $20 interest. 1040x tax return for prior year instructions You also receive a $15 calculator. 1040x tax return for prior year instructions If no other interest is credited to your account during the year, the Form 1099-INT you receive will show $35 interest for the year. 1040x tax return for prior year instructions You must report $35 interest income on your tax return. 1040x tax return for prior year instructions Interest on insurance dividends. 1040x tax return for prior year instructions   Interest on insurance dividends left on deposit with an insurance company that can be withdrawn annually is taxable to you in the year it is credited to your account. 1040x tax return for prior year instructions However, if you can withdraw it only on the anniversary date of the policy (or other specified date), the interest is taxable in the year that date occurs. 1040x tax return for prior year instructions Prepaid insurance premiums. 1040x tax return for prior year instructions   Any increase in the value of prepaid insurance premiums, advance premiums, or premium deposit funds is interest if it is applied to the payment of premiums due on insurance policies or made available for you to withdraw. 1040x tax return for prior year instructions U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions obligations. 1040x tax return for prior year instructions   Interest on U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions obligations, such as U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes. 1040x tax return for prior year instructions Interest on tax refunds. 1040x tax return for prior year instructions   Interest you receive on tax refunds is taxable income. 1040x tax return for prior year instructions Interest on condemnation award. 1040x tax return for prior year instructions   If the condemning authority pays you interest to compensate you for a delay in payment of an award, the interest is taxable. 1040x tax return for prior year instructions Installment sale payments. 1040x tax return for prior year instructions   If a contract for the sale or exchange of property provides for deferred payments, it also usually provides for interest payable with the deferred payments. 1040x tax return for prior year instructions That interest is taxable when you receive it. 1040x tax return for prior year instructions If little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest. 1040x tax return for prior year instructions See Unstated Interest and Original Issue Discount in Publication 537, Installment Sales. 1040x tax return for prior year instructions Interest on annuity contract. 1040x tax return for prior year instructions   Accumulated interest on an annuity contract you sell before its maturity date is taxable. 1040x tax return for prior year instructions Usurious interest. 1040x tax return for prior year instructions   Usurious interest is interest charged at an illegal rate. 1040x tax return for prior year instructions This is taxable as interest unless state law automatically changes it to a payment on the principal. 1040x tax return for prior year instructions Interest income on frozen deposits. 1040x tax return for prior year instructions   Exclude from your gross income interest on frozen deposits. 1040x tax return for prior year instructions A deposit is frozen if, at the end of the year, you cannot withdraw any part of the deposit because: The financial institution is bankrupt or insolvent, or The state where the institution is located has placed limits on withdrawals because other financial institutions in the state are bankrupt or insolvent. 1040x tax return for prior year instructions   The amount of interest you must exclude is the interest that was credited on the frozen deposits minus the sum of: The net amount you withdrew from these deposits during the year, and The amount you could have withdrawn as of the end of the year (not reduced by any penalty for premature withdrawals of a time deposit). 1040x tax return for prior year instructions If you receive a Form 1099-INT for interest income on deposits that were frozen at the end of 2013, see Frozen deposits under How To Report Interest Income in chapter 1 of Publication 550, for information about reporting this interest income exclusion on your tax return. 1040x tax return for prior year instructions   The interest you exclude is treated as credited to your account in the following year. 1040x tax return for prior year instructions You must include it in income in the year you can withdraw it. 1040x tax return for prior year instructions Example. 1040x tax return for prior year instructions $100 of interest was credited on your frozen deposit during the year. 1040x tax return for prior year instructions You withdrew $80 but could not withdraw any more as of the end of the year. 1040x tax return for prior year instructions You must include $80 in your income and exclude $20 from your income for the year. 1040x tax return for prior year instructions You must include the $20 in your income for the year you can withdraw it. 1040x tax return for prior year instructions Bonds traded flat. 1040x tax return for prior year instructions   If you buy a bond at a discount when interest has been defaulted or when the interest has accrued but has not been paid, the transaction is described as trading a bond flat. 1040x tax return for prior year instructions The defaulted or unpaid interest is not income and is not taxable as interest if paid later. 1040x tax return for prior year instructions When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. 1040x tax return for prior year instructions Interest that accrues after the date of purchase, however, is taxable interest income for the year it is received or accrued. 1040x tax return for prior year instructions See Bonds Sold Between Interest Dates , later, for more information. 1040x tax return for prior year instructions Below-market loans. 1040x tax return for prior year instructions   In general, a below-market loan is a loan on which no interest is charged or on which interest is charged at a rate below the applicable federal rate. 1040x tax return for prior year instructions See Below-Market Loans in chapter 1 of Publication 550 for more information. 1040x tax return for prior year instructions U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Savings Bonds This section provides tax information on U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds. 1040x tax return for prior year instructions It explains how to report the interest income on these bonds and how to treat transfers of these bonds. 1040x tax return for prior year instructions For other information on U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds, write to:  For series EE and I paper savings bonds: Bureau of the Public Debt Division of Customer Assistance P. 1040x tax return for prior year instructions O. 1040x tax return for prior year instructions Box 7012 Parkersburg, WV 26106-7012  For series EE and I electronic bonds: Bureau of the Public Debt Division of Customer Assistance P. 1040x tax return for prior year instructions O. 1040x tax return for prior year instructions Box 7015 Parkersburg, WV 26106–7015  For series HH/H: Bureau of the Public Debt Division of Customer Assistance P. 1040x tax return for prior year instructions O. 1040x tax return for prior year instructions Box 2186 Parkersburg, WV 26106-2186 Or, on the Internet, visit: www. 1040x tax return for prior year instructions treasurydirect. 1040x tax return for prior year instructions gov/indiv/indiv. 1040x tax return for prior year instructions htm. 1040x tax return for prior year instructions Accrual method taxpayers. 1040x tax return for prior year instructions   If you use an accrual method of accounting, you must report interest on U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds each year as it accrues. 1040x tax return for prior year instructions You cannot postpone reporting interest until you receive it or until the bonds mature. 1040x tax return for prior year instructions Accrual methods of accounting are explained in chapter 1 under Accounting Methods . 1040x tax return for prior year instructions Cash method taxpayers. 1040x tax return for prior year instructions   If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds when you receive it. 1040x tax return for prior year instructions The cash method of accounting is explained in chapter 1 under Accounting Methods. 1040x tax return for prior year instructions But see Reporting options for cash method taxpayers , later. 1040x tax return for prior year instructions Series HH bonds. 1040x tax return for prior year instructions    These bonds were issued at face value. 1040x tax return for prior year instructions Interest is paid twice a year by direct deposit to your bank account. 1040x tax return for prior year instructions If you are a cash method taxpayer, you must report interest on these bonds as income in the year you receive it. 1040x tax return for prior year instructions   Series HH bonds were first offered in 1980 and last offered in August 2004. 1040x tax return for prior year instructions Before 1980, series H bonds were issued. 1040x tax return for prior year instructions Series H bonds are treated the same as series HH bonds. 1040x tax return for prior year instructions If you are a cash method taxpayer, you must report the interest when you receive it. 1040x tax return for prior year instructions   Series H bonds have a maturity period of 30 years. 1040x tax return for prior year instructions Series HH bonds mature in 20 years. 1040x tax return for prior year instructions The last series H bonds matured in 2009. 1040x tax return for prior year instructions Series EE and series I bonds. 1040x tax return for prior year instructions   Interest on these bonds is payable when you redeem the bonds. 1040x tax return for prior year instructions The difference between the purchase price and the redemption value is taxable interest. 1040x tax return for prior year instructions Series EE bonds. 1040x tax return for prior year instructions   Series EE bonds were first offered in January 1980 and have a maturity period of 30 years. 1040x tax return for prior year instructions   Before July 1980, series E bonds were issued. 1040x tax return for prior year instructions The original 10-year maturity period of series E bonds has been extended to 40 years for bonds issued before December 1965 and 30 years for bonds issued after November 1965. 1040x tax return for prior year instructions Paper series EE and series E bonds are issued at a discount. 1040x tax return for prior year instructions The face value is payable to you at maturity. 1040x tax return for prior year instructions Electronic series EE bonds are issued at their face value. 1040x tax return for prior year instructions The face value plus accrued interest is payable to you at maturity. 1040x tax return for prior year instructions As of January 1, 2012, paper savings bonds were no longer sold at financial institutions. 1040x tax return for prior year instructions   Owners of paper series EE bonds can convert them to electronic bonds. 1040x tax return for prior year instructions These converted bonds do not retain the denomination listed on the paper certificate but are posted at their purchase price (with accrued interest). 1040x tax return for prior year instructions Series I bonds. 1040x tax return for prior year instructions   Series I bonds were first offered in 1998. 1040x tax return for prior year instructions These are inflation-indexed bonds issued at their face amount with a maturity period of 30 years. 1040x tax return for prior year instructions The face value plus all accrued interest is payable to you at maturity. 1040x tax return for prior year instructions Reporting options for cash method taxpayers. 1040x tax return for prior year instructions   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. 1040x tax return for prior year instructions Method 1. 1040x tax return for prior year instructions Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year they mature. 1040x tax return for prior year instructions (However, see Savings bonds traded , later. 1040x tax return for prior year instructions )  Note. 1040x tax return for prior year instructions Series EE bonds issued in 1983 matured in 2013. 1040x tax return for prior year instructions If you have used method 1, you generally must report the interest on these bonds on your 2013 return. 1040x tax return for prior year instructions The last series E bonds were issued in 1980 and matured in 2010. 1040x tax return for prior year instructions If you used method 1, you generally should have reported the interest on these bonds on your 2010 return. 1040x tax return for prior year instructions Method 2. 1040x tax return for prior year instructions Choose to report the increase in redemption value as interest each year. 1040x tax return for prior year instructions You must use the same method for all series EE, series E, and series I bonds you own. 1040x tax return for prior year instructions If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1. 1040x tax return for prior year instructions    If you plan to cash your bonds in the same year you will pay for higher education expenses, you may want to use method 1 because you may be able to exclude the interest from your income. 1040x tax return for prior year instructions To learn how, see Education Savings Bond Program, later. 1040x tax return for prior year instructions Change from method 1. 1040x tax return for prior year instructions   If you want to change your method of reporting the interest from method 1 to method 2, you can do so without permission from the IRS. 1040x tax return for prior year instructions In the year of change you must report all interest accrued to date and not previously reported for all your bonds. 1040x tax return for prior year instructions   Once you choose to report the interest each year, you must continue to do so for all series EE, series E, and series I bonds you own and for any you get later, unless you request permission to change, as explained next. 1040x tax return for prior year instructions Change from method 2. 1040x tax return for prior year instructions   To change from method 2 to method 1, you must request permission from the IRS. 1040x tax return for prior year instructions Permission for the change is automatically granted if you send the IRS a statement that meets all the following requirements. 1040x tax return for prior year instructions You have typed or printed the following number at the top: “131. 1040x tax return for prior year instructions ” It includes your name and social security number under “131. 1040x tax return for prior year instructions ” It includes the year of change (both the beginning and ending dates). 1040x tax return for prior year instructions It identifies the savings bonds for which you are requesting this change. 1040x tax return for prior year instructions It includes your agreement to: Report all interest on any bonds acquired during or after the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, and Report all interest on the bonds acquired before the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, with the exception of the interest reported in prior tax years. 1040x tax return for prior year instructions   You must attach this statement to your tax return for the year of change, which you must file by the due date (including extensions). 1040x tax return for prior year instructions   You can have an automatic extension of 6 months from the due date of your return for the year of change (excluding extensions) to file the statement with an amended return. 1040x tax return for prior year instructions On the statement, type or print “Filed pursuant to section 301. 1040x tax return for prior year instructions 9100-2. 1040x tax return for prior year instructions ” To get this extension, you must have filed your original return for the year of the change by the due date (including extensions). 1040x tax return for prior year instructions    By the date you file the original statement with your return, you must also send a signed copy to the address below. 1040x tax return for prior year instructions   Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) P. 1040x tax return for prior year instructions O. 1040x tax return for prior year instructions Box 7604 Benjamin Franklin Station Washington, DC 20044   If you use a private delivery service, send the signed copy to the address below. 1040x tax return for prior year instructions   Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) Room 5336 1111 Constitution Avenue, NW  Washington, DC 20224   Instead of filing this statement, you can request permission to change from method 2 to method 1 by filing Form 3115, Application for Change in Accounting Method. 1040x tax return for prior year instructions In that case, follow the form instructions for an automatic change. 1040x tax return for prior year instructions No user fee is required. 1040x tax return for prior year instructions Co-owners. 1040x tax return for prior year instructions   If a U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bond is issued in the names of co-owners, such as you and your child or you and your spouse, interest on the bond is generally taxable to the co-owner who bought the bond. 1040x tax return for prior year instructions One co-owner's funds used. 1040x tax return for prior year instructions    If you used your funds to buy the bond, you must pay the tax on the interest. 1040x tax return for prior year instructions This is true even if you let the other co-owner redeem the bond and keep all the proceeds. 1040x tax return for prior year instructions Under these circumstances, the co-owner who redeemed the bond will receive a Form 1099-INT at the time of redemption and must provide you with another Form 1099-INT showing the amount of interest from the bond taxable to you. 1040x tax return for prior year instructions The co-owner who redeemed the bond is a “nominee. 1040x tax return for prior year instructions ” See Nominee distributions under How To Report Interest Income in chapter 1 of Publication 550 for more information about how a person who is a nominee reports interest income belonging to another person. 1040x tax return for prior year instructions Both co-owners' funds used. 1040x tax return for prior year instructions   If you and the other co-owner each contribute part of the bond's purchase price, the interest is generally taxable to each of you, in proportion to the amount each of you paid. 1040x tax return for prior year instructions Community property. 1040x tax return for prior year instructions   If you and your spouse live in a community property state and hold bonds as community property, one-half of the interest is considered received by each of you. 1040x tax return for prior year instructions If you file separate returns, each of you generally must report one-half of the bond interest. 1040x tax return for prior year instructions For more information about community property, see Publication 555. 1040x tax return for prior year instructions Table 7-1. 1040x tax return for prior year instructions   These rules are also shown in Table 7-1. 1040x tax return for prior year instructions Ownership transferred. 1040x tax return for prior year instructions   If you bought series E, series EE, or series I bonds entirely with your own funds and had them reissued in your co-owner's name or beneficiary's name alone, you must include in your gross income for the year of reissue all interest that you earned on these bonds and have not previously reported. 1040x tax return for prior year instructions But, if the bonds were reissued in your name alone, you do not have to report the interest accrued at that time. 1040x tax return for prior year instructions   This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to divorce. 1040x tax return for prior year instructions Purchased jointly. 1040x tax return for prior year instructions   If you and a co-owner each contributed funds to buy series E, series EE, or series I bonds jointly and later have the bonds reissued in the co-owner's name alone, you must include in your gross income for the year of reissue your share of all the interest earned on the bonds that you have not previously reported. 1040x tax return for prior year instructions The former co-owner does not have to include in gross income at the time of reissue his or her share of the interest earned that was not reported before the transfer. 1040x tax return for prior year instructions This interest, however, as well as all interest earned after the reissue, is income to the former co-owner. 1040x tax return for prior year instructions   This income-reporting rule also applies when the bonds are reissued in the name of your former co-owner and a new co-owner. 1040x tax return for prior year instructions But the new co-owner will report only his or her share of the interest earned after the transfer. 1040x tax return for prior year instructions   If bonds that you and a co-owner bought jointly are reissued to each of you separately in the same proportion as your contribution to the purchase price, neither you nor your co-owner has to report at that time the interest earned before the bonds were reissued. 1040x tax return for prior year instructions    Table 7-1. 1040x tax return for prior year instructions Who Pays the Tax on U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Savings Bond Interest IF . 1040x tax return for prior year instructions . 1040x tax return for prior year instructions . 1040x tax return for prior year instructions THEN the interest must be reported by . 1040x tax return for prior year instructions . 1040x tax return for prior year instructions . 1040x tax return for prior year instructions you buy a bond in your name and the name of another person as co-owners, using only your own funds you. 1040x tax return for prior year instructions you buy a bond in the name of another person, who is the sole owner of the bond the person for whom you bought the bond. 1040x tax return for prior year instructions you and another person buy a bond as co-owners, each contributing part of the purchase price both you and the other co-owner, in proportion to the amount each paid for the bond. 1040x tax return for prior year instructions you and your spouse, who live in a community property state, buy a bond that is community property you and your spouse. 1040x tax return for prior year instructions If you file separate returns, both you and your spouse generally report one-half of the interest. 1040x tax return for prior year instructions Example 1. 1040x tax return for prior year instructions You and your spouse each spent an equal amount to buy a $1,000 series EE savings bond. 1040x tax return for prior year instructions The bond was issued to you and your spouse as co-owners. 1040x tax return for prior year instructions You both postpone reporting interest on the bond. 1040x tax return for prior year instructions You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. 1040x tax return for prior year instructions At that time neither you nor your spouse has to report the interest earned to the date of reissue. 1040x tax return for prior year instructions Example 2. 1040x tax return for prior year instructions You bought a $1,000 series EE savings bond entirely with your own funds. 1040x tax return for prior year instructions The bond was issued to you and your spouse as co-owners. 1040x tax return for prior year instructions You both postpone reporting interest on the bond. 1040x tax return for prior year instructions You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. 1040x tax return for prior year instructions You must report half the interest earned to the date of reissue. 1040x tax return for prior year instructions Transfer to a trust. 1040x tax return for prior year instructions   If you own series E, series EE, or series I bonds and transfer them to a trust, giving up all rights of ownership, you must include in your income for that year the interest earned to the date of transfer if you have not already reported it. 1040x tax return for prior year instructions However, if you are considered the owner of the trust and if the increase in value both before and after the transfer continues to be taxable to you, you can continue to defer reporting the interest earned each year. 1040x tax return for prior year instructions You must include the total interest in your income in the year you cash or dispose of the bonds or the year the bonds finally mature, whichever is earlier. 1040x tax return for prior year instructions   The same rules apply to previously unreported interest on series EE or series E bonds if the transfer to a trust consisted of series HH or series H bonds you acquired in a trade for the series EE or series E bonds. 1040x tax return for prior year instructions See Savings bonds traded , later. 1040x tax return for prior year instructions Decedents. 1040x tax return for prior year instructions   The manner of reporting interest income on series E, series EE, or series I bonds, after the death of the owner (decedent), depends on the accounting and income-reporting methods previously used by the decedent. 1040x tax return for prior year instructions This is explained in chapter 1 of Publication 550. 1040x tax return for prior year instructions Savings bonds traded. 1040x tax return for prior year instructions   If you postponed reporting the interest on your series EE or series E bonds, you did not recognize taxable income when you traded the bonds for series HH or series H bonds, unless you received cash in the trade. 1040x tax return for prior year instructions (You cannot trade series I bonds for series HH bonds. 1040x tax return for prior year instructions After August 31, 2004, you cannot trade any other series of bonds for series HH bonds. 1040x tax return for prior year instructions ) Any cash you received is income up to the amount of the interest earned on the bonds traded. 1040x tax return for prior year instructions When your series HH or series H bonds mature, or if you dispose of them before maturity, you report as interest the difference between their redemption value and your cost. 1040x tax return for prior year instructions Your cost is the sum of the amount you paid for the traded series EE or series E bonds plus any amount you had to pay at the time of the trade. 1040x tax return for prior year instructions Example. 1040x tax return for prior year instructions You traded series EE bonds (on which you postponed reporting the interest) for $2,500 in series HH bonds and $223 in cash. 1040x tax return for prior year instructions You reported the $223 as taxable income on your tax return. 1040x tax return for prior year instructions At the time of the trade, the series EE bonds had accrued interest of $523 and a redemption value of $2,723. 1040x tax return for prior year instructions You hold the series HH bonds until maturity, when you receive $2,500. 1040x tax return for prior year instructions You must report $300 as interest income in the year of maturity. 1040x tax return for prior year instructions This is the difference between their redemption value, $2,500, and your cost, $2,200 (the amount you paid for the series EE bonds). 1040x tax return for prior year instructions (It is also the difference between the accrued interest of $523 on the series EE bonds and the $223 cash received on the trade. 1040x tax return for prior year instructions ) Choice to report interest in year of trade. 1040x tax return for prior year instructions   You could have chosen to treat all of the previously unreported accrued interest on the series EE or series E bonds traded for series HH bonds as income in the year of the trade. 1040x tax return for prior year instructions If you made this choice, it is treated as a change from method 1. 1040x tax return for prior year instructions See Change from method 1 under Series EE and series I bonds, earlier. 1040x tax return for prior year instructions Form 1099-INT for U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds interest. 1040x tax return for prior year instructions   When you cash a bond, the bank or other payer that redeems it must give you a Form 1099-INT if the interest part of the payment you receive is $10 or more. 1040x tax return for prior year instructions Box 3 of your Form 1099-INT should show the interest as the difference between the amount you received and the amount paid for the bond. 1040x tax return for prior year instructions However, your Form 1099-INT may show more interest than you have to include on your income tax return. 1040x tax return for prior year instructions For example, this may happen if any of the following are true. 1040x tax return for prior year instructions You chose to report the increase in the redemption value of the bond each year. 1040x tax return for prior year instructions The interest shown on your Form 1099-INT will not be reduced by amounts previously included in income. 1040x tax return for prior year instructions You received the bond from a decedent. 1040x tax return for prior year instructions The interest shown on your Form 1099-INT will not be reduced by any interest reported by the decedent before death, or on the decedent's final return, or by the estate on the estate's income tax return. 1040x tax return for prior year instructions Ownership of the bond was transferred. 1040x tax return for prior year instructions The interest shown on your Form 1099-INT will not be reduced by interest that accrued before the transfer. 1040x tax return for prior year instructions You were named as a co-owner, and the other co-owner contributed funds to buy the bond. 1040x tax return for prior year instructions The interest shown on your Form 1099-INT will not be reduced by the amount you received as nominee for the other co-owner. 1040x tax return for prior year instructions (See Co-owners , earlier in this chapter, for more information about the reporting requirements. 1040x tax return for prior year instructions ) You received the bond in a taxable distribution from a retirement or profit-sharing plan. 1040x tax return for prior year instructions The interest shown on your Form 1099-INT will not be reduced by the interest portion of the amount taxable as a distribution from the plan and not taxable as interest. 1040x tax return for prior year instructions (This amount is generally shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. 1040x tax return for prior year instructions , for the year of distribution. 1040x tax return for prior year instructions )   For more information on including the correct amount of interest on your return, see How To Report Interest Income , later. 1040x tax return for prior year instructions Publication 550 includes examples showing how to report these amounts. 1040x tax return for prior year instructions    Interest on U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds is exempt from state and local taxes. 1040x tax return for prior year instructions The Form 1099-INT you receive will indicate the amount that is for U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bond interest in box 3. 1040x tax return for prior year instructions Education Savings Bond Program You may be able to exclude from income all or part of the interest you receive on the redemption of qualified U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds during the year if you pay qualified higher educational expenses during the same year. 1040x tax return for prior year instructions This exclusion is known as the Education Savings Bond Program. 1040x tax return for prior year instructions You do not qualify for this exclusion if your filing status is married filing separately. 1040x tax return for prior year instructions Form 8815. 1040x tax return for prior year instructions   Use Form 8815 to figure your exclusion. 1040x tax return for prior year instructions Attach the form to your Form 1040 or Form 1040A. 1040x tax return for prior year instructions Qualified U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds. 1040x tax return for prior year instructions   A qualified U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bond is a series EE bond issued after 1989 or a series I bond. 1040x tax return for prior year instructions The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). 1040x tax return for prior year instructions You must be at least 24 years old before the bond's issue date. 1040x tax return for prior year instructions For example, a bond bought by a parent and issued in the name of his or her child under age 24 does not qualify for the exclusion by the parent or child. 1040x tax return for prior year instructions    The issue date of a bond may be earlier than the date the bond is purchased because the issue date assigned to a bond is the first day of the month in which it is purchased. 1040x tax return for prior year instructions Beneficiary. 1040x tax return for prior year instructions   You can designate any individual (including a child) as a beneficiary of the bond. 1040x tax return for prior year instructions Verification by IRS. 1040x tax return for prior year instructions   If you claim the exclusion, the IRS will check it by using bond redemption information from the Department of the Treasury. 1040x tax return for prior year instructions Qualified expenses. 1040x tax return for prior year instructions   Qualified higher educational expenses are tuition and fees required for you, your spouse, or your dependent (for whom you claim an exemption) to attend an eligible educational institution. 1040x tax return for prior year instructions   Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account. 1040x tax return for prior year instructions   Qualified expenses do not include expenses for room and board or for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. 1040x tax return for prior year instructions Eligible educational institutions. 1040x tax return for prior year instructions   These institutions include most public, private, and nonprofit universities, colleges, and vocational schools that are accredited and eligible to participate in student aid programs run by the U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Department of Education. 1040x tax return for prior year instructions Reduction for certain benefits. 1040x tax return for prior year instructions   You must reduce your qualified higher educational expenses by all of the following tax-free benefits. 1040x tax return for prior year instructions Tax-free part of scholarships and fellowships (see Scholarships and fellowships in chapter 12). 1040x tax return for prior year instructions Expenses used to figure the tax-free portion of distributions from a Coverdell ESA. 1040x tax return for prior year instructions Expenses used to figure the tax-free portion of distributions from a qualified tuition program. 1040x tax return for prior year instructions Any tax-free payments (other than gifts or inheritances) received for educational expenses, such as Veterans' educational assistance benefits, Qualified tuition reductions, or Employer-provided educational assistance. 1040x tax return for prior year instructions Any expense used in figuring the American Opportunity and lifetime learning credits. 1040x tax return for prior year instructions Amount excludable. 1040x tax return for prior year instructions   If the total proceeds (interest and principal) from the qualified U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds you redeem during the year are not more than your adjusted qualified higher educational expenses for the year, you may be able to exclude all of the interest. 1040x tax return for prior year instructions If the proceeds are more than the expenses, you may be able to exclude only part of the interest. 1040x tax return for prior year instructions   To determine the excludable amount, multiply the interest part of the proceeds by a fraction. 1040x tax return for prior year instructions The numerator of the fraction is the qualified higher educational expenses you paid during the year. 1040x tax return for prior year instructions The denominator of the fraction is the total proceeds you received during the year. 1040x tax return for prior year instructions Example. 1040x tax return for prior year instructions In February 2013, Mark and Joan, a married couple, cashed a qualified series EE U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bond they bought in April 1997. 1040x tax return for prior year instructions They received proceeds of $8,372 representing principal of $5,000 and interest of $3,372. 1040x tax return for prior year instructions In 2013, they paid $4,000 of their daughter's college tuition. 1040x tax return for prior year instructions They are not claiming an education credit for that amount, and their daughter does not have any tax-free educational assistance. 1040x tax return for prior year instructions They can exclude $1,611 ($3,372 × ($4,000 ÷ $8,372)) of interest in 2013. 1040x tax return for prior year instructions They must pay tax on the remaining $1,761 ($3,372 − $1,611) interest. 1040x tax return for prior year instructions Modified adjusted gross income limit. 1040x tax return for prior year instructions   The interest exclusion is limited if your modified adjusted gross income (modified AGI) is: $74,700 to $89,700 for taxpayers filing single or head of household, and $112,050 to $142,050 for married taxpayers filing jointly or for a qualifying widow(er) with dependent child. 1040x tax return for prior year instructions You do not qualify for the interest exclusion if your modified AGI is equal to or more than the upper limit for your filing status. 1040x tax return for prior year instructions   Modified AGI, for purposes of this exclusion, is adjusted gross income (Form 1040, line 37, or Form 1040A, line 21) figured before the interest exclusion, and modified by adding back any: Foreign earned income exclusion, Foreign housing exclusion and deduction, Exclusion of income for bona fide residents of American Samoa, Exclusion for income from Puerto Rico, Exclusion for adoption benefits received under an employer's adoption assistance program, Deduction for tuition and fees, Deduction for student loan interest, and Deduction for domestic production activities. 1040x tax return for prior year instructions   Use the Line 9 Worksheet in the Form 8815 instructions to figure your modified AGI. 1040x tax return for prior year instructions If you claim any of the exclusion or deduction items listed above (except items 6, 7, and 8), add the amount of the exclusion or deduction (except items 6, 7, and 8) to the amount on line 5 of the worksheet, and enter the total on Form 8815, line 9, as your modified AGI. 1040x tax return for prior year instructions   If you have investment interest expense incurred to earn royalties and other investment income, see Education Savings Bond Program in chapter 1 of Publication 550. 1040x tax return for prior year instructions Recordkeeping. 1040x tax return for prior year instructions If you claim the interest exclusion, you must keep a written record of the qualified U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds you redeem. 1040x tax return for prior year instructions Your record must include the serial number, issue date, face value, and total redemption proceeds (principal and interest) of each bond. 1040x tax return for prior year instructions You can use Form 8818 to record this information. 1040x tax return for prior year instructions You should also keep bills, receipts, canceled checks, or other documentation that shows you paid qualified higher educational expenses during the year. 1040x tax return for prior year instructions U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Treasury Bills, Notes, and Bonds Treasury bills, notes, and bonds are direct debts (obligations) of the U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Government. 1040x tax return for prior year instructions Taxation of interest. 1040x tax return for prior year instructions   Interest income from Treasury bills, notes, and bonds is subject to federal income tax but is exempt from all state and local income taxes. 1040x tax return for prior year instructions You should receive Form 1099-INT showing the interest (in box 3) paid to you for the year. 1040x tax return for prior year instructions   Payments of principal and interest generally will be credited to your designated checking or savings account by direct deposit through the TreasuryDirect® system. 1040x tax return for prior year instructions Treasury bills. 1040x tax return for prior year instructions   These bills generally have a 4-week, 13-week, 26-week, or 52-week maturity period. 1040x tax return for prior year instructions They are generally issued at a discount in the amount of $100 and multiples of $100. 1040x tax return for prior year instructions The difference between the discounted price you pay for the bills and the face value you receive at maturity is interest income. 1040x tax return for prior year instructions Generally, you report this interest income when the bill is paid at maturity. 1040x tax return for prior year instructions If you paid a premium for a bill (more than the face value), you generally report the premium as a section 171 deduction when the bill is paid at maturity. 1040x tax return for prior year instructions Treasury notes and bonds. 1040x tax return for prior year instructions   Treasury notes have maturity periods of more than 1 year, ranging up to 10 years. 1040x tax return for prior year instructions Maturity periods for Treasury bonds are longer than 10 years. 1040x tax return for prior year instructions Both generally are issued in denominations of $100 to $1 million and generally pay interest every 6 months. 1040x tax return for prior year instructions Generally, you report this interest for the year paid. 1040x tax return for prior year instructions For more information, see U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Treasury Bills, Notes, and Bonds in chapter 1 of Publication 550. 1040x tax return for prior year instructions For other information on Treasury notes or bonds, write to:  Bureau of the Public Debt P. 1040x tax return for prior year instructions O. 1040x tax return for prior year instructions Box 7015 Parkersburg, WV 26106-7015 Or, on the Internet, visit: www. 1040x tax return for prior year instructions treasurydirect. 1040x tax return for prior year instructions gov/indiv/indiv. 1040x tax return for prior year instructions htm. 1040x tax return for prior year instructions For information on series EE, series I, and series HH savings bonds, see U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Savings Bonds , earlier. 1040x tax return for prior year instructions Treasury inflation-protected securities (TIPS). 1040x tax return for prior year instructions   These securities pay interest twice a year at a fixed rate, based on a principal amount adjusted to take into account inflation and deflation. 1040x tax return for prior year instructions For the tax treatment of these securities, see Inflation-Indexed Debt Instruments under Original Issue Discount (OID), in Publication 550. 1040x tax return for prior year instructions Bonds Sold Between Interest Dates If you sell a bond between interest payment dates, part of the sales price represents interest accrued to the date of sale. 1040x tax return for prior year instructions You must report that part of the sales price as interest income for the year of sale. 1040x tax return for prior year instructions If you buy a bond between interest payment dates, part of the purchase price represents interest accrued before the date of purchase. 1040x tax return for prior year instructions When that interest is paid to you, treat it as a return of your capital investment, rather than interest income, by reducing your basis in the bond. 1040x tax return for prior year instructions See Accrued interest on bonds under How To Report Interest Income in chapter 1 of Publication 550 for information on reporting the payment. 1040x tax return for prior year instructions Insurance Life insurance proceeds paid to you as beneficiary of the insured person are usually not taxable. 1040x tax return for prior year instructions But if you receive the proceeds in installments, you must usually report a part of each installment payment as interest income. 1040x tax return for prior year instructions For more information about insurance proceeds received in installments, see Publication 525, Taxable and Nontaxable Income. 1040x tax return for prior year instructions Annuity. 1040x tax return for prior year instructions   If you buy an annuity with life insurance proceeds, the annuity payments you receive are taxed as pension and annuity income from a nonqualified plan, not as interest income. 1040x tax return for prior year instructions See chapter 10 for information on pension and annuity income from nonqualified plans. 1040x tax return for prior year instructions State or Local Government Obligations Interest on a bond used to finance government operations generally is not taxable if the bond is issued by a state, the District of Columbia, a possession of the United States, or any of their political subdivisions. 1040x tax return for prior year instructions Bonds issued after 1982 (including tribal economic development bonds issued after February 17, 2009) by an Indian tribal government are treated as issued by a state. 1040x tax return for prior year instructions Interest on these bonds is generally tax exempt if the bonds are part of an issue of which substantially all proceeds are to be used in the exercise of any essential government function. 1040x tax return for prior year instructions For information on federally guaranteed bonds, mortgage revenue bonds, arbitrage bonds, private activity bonds, qualified tax credit bonds, and Build America bonds, see State or Local Government Obligations in chapter 1 of Publication 550. 1040x tax return for prior year instructions Information reporting requirement. 1040x tax return for prior year instructions   If you must file a tax return, you are required to show any tax-exempt interest you received on your return. 1040x tax return for prior year instructions This is an information reporting requirement only. 1040x tax return for prior year instructions It does not change tax-exempt interest to taxable interest. 1040x tax return for prior year instructions Original Issue Discount (OID) Original issue discount (OID) is a form of interest. 1040x tax return for prior year instructions You generally include OID in your income as it accrues over the term of the debt instrument, whether or not you receive any payments from the issuer. 1040x tax return for prior year instructions A debt instrument generally has OID when the instrument is issued for a price that is less than its stated redemption price at maturity. 1040x tax return for prior year instructions OID is the difference between the stated redemption price at maturity and the issue price. 1040x tax return for prior year instructions All debt instruments that pay no interest before maturity are presumed to be issued at a discount. 1040x tax return for prior year instructions Zero coupon bonds are one example of these instruments. 1040x tax return for prior year instructions The OID accrual rules generally do not apply to short-term obligations (those with a fixed maturity date of 1 year or less from date of issue). 1040x tax return for prior year instructions See Discount on Short-Term Obligations in chapter 1 of Publication 550. 1040x tax return for prior year instructions De minimis OID. 1040x tax return for prior year instructions   You can treat the discount as zero if it is less than one-fourth of 1% (. 1040x tax return for prior year instructions 0025) of the stated redemption price at maturity multiplied by the number of full years from the date of original issue to maturity. 1040x tax return for prior year instructions This small discount is known as “de minimis” OID. 1040x tax return for prior year instructions Example 1. 1040x tax return for prior year instructions You bought a 10-year bond with a stated redemption price at maturity of $1,000, issued at $980 with OID of $20. 1040x tax return for prior year instructions One-fourth of 1% of $1,000 (stated redemption price) times 10 (the number of full years from the date of original issue to maturity) equals $25. 1040x tax return for prior year instructions Because the $20 discount is less than $25, the OID is treated as zero. 1040x tax return for prior year instructions (If you hold the bond at maturity, you will recognize $20 ($1,000 − $980) of capital gain. 1040x tax return for prior year instructions ) Example 2. 1040x tax return for prior year instructions The facts are the same as in Example 1, except that the bond was issued at $950. 1040x tax return for prior year instructions The OID is $50. 1040x tax return for prior year instructions Because the $50 discount is more than the $25 figured in Example 1, you must include the OID in income as it accrues over the term of the bond. 1040x tax return for prior year instructions Debt instrument bought after original issue. 1040x tax return for prior year instructions   If you buy a debt instrument with de minimis OID at a premium, the discount is not includible in income. 1040x tax return for prior year instructions If you buy a debt instrument with de minimis OID at a discount, the discount is reported under the market discount rules. 1040x tax return for prior year instructions See Market Discount Bonds in chapter 1 of Publication 550. 1040x tax return for prior year instructions Exceptions to reporting OID. 1040x tax return for prior year instructions   The OID rules discussed in this chapter do not apply to the following debt instruments. 1040x tax return for prior year instructions Tax-exempt obligations. 1040x tax return for prior year instructions (However, see Stripped tax-exempt obligations under Stripped Bonds and Coupons in chapter 1 of Publication 550). 1040x tax return for prior year instructions U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds. 1040x tax return for prior year instructions Short-term debt instruments (those with a fixed maturity date of not more than 1 year from the date of issue). 1040x tax return for prior year instructions Obligations issued by an individual before March 2, 1984. 1040x tax return for prior year instructions Loans between individuals if all the following are true. 1040x tax return for prior year instructions The lender is not in the business of lending money. 1040x tax return for prior year instructions The amount of the loan, plus the amount of any outstanding prior loans between the same individuals, is $10,000 or less. 1040x tax return for prior year instructions Avoiding any federal tax is not one of the principal purposes of the loan. 1040x tax return for prior year instructions Form 1099-OID. 1040x tax return for prior year instructions   The issuer of the debt instrument (or your broker if you held the instrument through a broker) should give you Form 1099-OID, or a similar statement, if the total OID for the calendar year is $10 or more. 1040x tax return for prior year instructions Form 1099-OID will show, in box 1, the amount of OID for the part of the year that you held the bond. 1040x tax return for prior year instructions It also will show, in box 2, the stated interest you must include in your income. 1040x tax return for prior year instructions A copy of Form 1099-OID will be sent to the IRS. 1040x tax return for prior year instructions Do not file your copy with your return. 1040x tax return for prior year instructions Keep it for your records. 1040x tax return for prior year instructions   In most cases, you must report the entire amount in boxes 1 and 2 of Form 1099-OID as interest income. 1040x tax return for prior year instructions But see Refiguring OID shown on Form 1099-OID, later in this discussion, for more information. 1040x tax return for prior year instructions Form 1099-OID not received. 1040x tax return for prior year instructions   If you had OID for the year but did not receive a Form 1099-OID, you can find tables on IRS. 1040x tax return for prior year instructions gov that list total OID on certain debt instruments and have information that will help you figure OID. 1040x tax return for prior year instructions For the latest OID tables, go to www. 1040x tax return for prior year instructions irs. 1040x tax return for prior year instructions gov and enter “OID tables” in the Search box. 1040x tax return for prior year instructions If your debt instrument is not listed, consult the issuer for further information about the accrued OID for the year. 1040x tax return for prior year instructions Nominee. 1040x tax return for prior year instructions   If someone else is the holder of record (the registered owner) of an OID instrument belonging to you and receives a Form 1099-OID on your behalf, that person must give you a Form 1099-OID. 1040x tax return for prior year instructions Refiguring OID shown on Form 1099-OID. 1040x tax return for prior year instructions   You must refigure the OID shown in box 1 or box 8 of Form 1099-OID if either of the following apply. 1040x tax return for prior year instructions You bought the debt instrument after its original issue and paid a premium or an acquisition premium. 1040x tax return for prior year instructions The debt instrument is a stripped bond or a stripped coupon (including certain zero coupon instruments). 1040x tax return for prior year instructions For information about figuring the correct amount of OID to include in your income, see Figuring OID on Long-Term Debt Instruments in Publication 1212. 1040x tax return for prior year instructions Refiguring periodic interest shown on Form 1099-OID. 1040x tax return for prior year instructions   If you disposed of a debt instrument or acquired it from another holder during the year, see Bonds Sold Between Interest Dates , earlier, for information about the treatment of periodic interest that may be shown in box 2 of Form 1099-OID for that instrument. 1040x tax return for prior year instructions Certificates of deposit (CDs). 1040x tax return for prior year instructions   If you buy a CD with a maturity of more than 1 year, you must include in income each year a part of the total interest due and report it in the same manner as other OID. 1040x tax return for prior year instructions   This also applies to similar deposit arrangements with banks, building and loan associations, etc. 1040x tax return for prior year instructions , including: Time deposits, Bonus plans, Savings certificates, Deferred income certificates, Bonus savings certificates, and Growth savings certificates. 1040x tax return for prior year instructions Bearer CDs. 1040x tax return for prior year instructions   CDs issued after 1982 generally must be in registered form. 1040x tax return for prior year instructions Bearer CDs are CDs not in registered form. 1040x tax return for prior year instructions They are not issued in the depositor's name and are transferable from one individual to another. 1040x tax return for prior year instructions   Banks must provide the IRS and the person redeeming a bearer CD with a Form 1099-INT. 1040x tax return for prior year instructions More information. 1040x tax return for prior year instructions   See chapter 1 of Publication 550 for more information about OID and related topics, such as market discount bonds. 1040x tax return for prior year instructions When To Report Interest Income When to report your interest income depends on whether you use the cash method or an accrual method to report income. 1040x tax return for prior year instructions Cash method. 1040x tax return for prior year instructions   Most individual taxpayers use the cash method. 1040x tax return for prior year instructions If you use this method, you generally report your interest income in the year in which you actually or constructively receive it. 1040x tax return for prior year instructions However, there are special rules for reporting the discount on certain debt instruments. 1040x tax return for prior year instructions See U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Savings Bonds and Original Issue Discount (OID) , earlier. 1040x tax return for prior year instructions Example. 1040x tax return for prior year instructions On September 1, 2011, you loaned another individual $2,000 at 12%, compounded annually. 1040x tax return for prior year instructions You are not in the business of lending money. 1040x tax return for prior year instructions The note stated that principal and interest would be due on August 31, 2013. 1040x tax return for prior year instructions In 2013, you received $2,508. 1040x tax return for prior year instructions 80 ($2,000 principal and $508. 1040x tax return for prior year instructions 80 interest). 1040x tax return for prior year instructions If you use the cash method, you must include in income on your 2013 return the $508. 1040x tax return for prior year instructions 80 interest you received in that year. 1040x tax return for prior year instructions Constructive receipt. 1040x tax return for prior year instructions   You constructively receive income when it is credited to your account or made available to you. 1040x tax return for prior year instructions You do not need to have physical possession of it. 1040x tax return for prior year instructions For example, you are considered to receive interest, dividends, or other earnings on any deposit or account in a bank, savings and loan, or similar financial institution, or interest on life insurance policy dividends left to accumulate, when they are credited to your account and subject to your withdrawal. 1040x tax return for prior year instructions This is true even if they are not yet entered in your passbook. 1040x tax return for prior year instructions   You constructively receive income on the deposit or account even if you must: Make withdrawals in multiples of even amounts, Give a notice to withdraw before making the withdrawal, Withdraw all or part of the account to withdraw the earnings, or Pay a penalty on early withdrawals, unless the interest you are to receive on an early withdrawal or redemption is substantially less than the interest payable at maturity. 1040x tax return for prior year instructions Accrual method. 1040x tax return for prior year instructions   If you use an accrual method, you report your interest income when you earn it, whether or not you have received it. 1040x tax return for prior year instructions Interest is earned over the term of the debt instrument. 1040x tax return for prior year instructions Example. 1040x tax return for prior year instructions If, in the previous example, you use an accrual method, you must include the interest in your income as you earn it. 1040x tax return for prior year instructions You would report the interest as follows: 2011, $80; 2012, $249. 1040x tax return for prior year instructions 60; and 2013, $179. 1040x tax return for prior year instructions 20. 1040x tax return for prior year instructions Coupon bonds. 1040x tax return for prior year instructions   Interest on coupon bonds is taxable in the year the coupon becomes due and payable. 1040x tax return for prior year instructions It does not matter when you mail the coupon for payment. 1040x tax return for prior year instructions How To Report Interest Income Generally, you report all your taxable interest income on Form 1040, line 8a; Form 1040A, line 8a; or Form 1040EZ, line 2. 1040x tax return for prior year instructions You cannot use Form 1040EZ if your taxable interest income is more than $1,500. 1040x tax return for prior year instructions Instead, you must use Form 1040A or Form 1040. 1040x tax return for prior year instructions Form 1040A. 1040x tax return for prior year instructions   You must complete Schedule B (Form 1040A or 1040), Part I, if you file Form 1040A and any of the following are true. 1040x tax return for prior year instructions Your taxable interest income is more than $1,500. 1040x tax return for prior year instructions You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier). 1040x tax return for prior year instructions You received interest from a seller-financed mortgage, and the buyer used the property as a home. 1040x tax return for prior year instructions You received a Form 1099-INT for U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bond interest that includes amounts you reported before 2013. 1040x tax return for prior year instructions You received, as a nominee, interest that actually belongs to someone else. 1040x tax return for prior year instructions You received a Form 1099-INT for interest on frozen deposits. 1040x tax return for prior year instructions You are reporting OID in an amount less than the amount shown on Form 1099-OID. 1040x tax return for prior year instructions You received a Form 1099-INT for interest on a bond you bought between interest payment dates. 1040x tax return for prior year instructions You acquired taxable bonds after 1987 and choose to reduce interest income from the bonds by any amortizable bond premium (see Bond Premium Amortization in chapter 3 of Publication 550). 1040x tax return for prior year instructions List each payer's name and the amount of interest income received from each payer on line 1. 1040x tax return for prior year instructions If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer. 1040x tax return for prior year instructions   You cannot use Form 1040A if you must use Form 1040, as described next. 1040x tax return for prior year instructions Form 1040. 1040x tax return for prior year instructions   You must use Form 1040 instead of Form 1040A or Form 1040EZ if: You forfeited interest income because of the early withdrawal of a time deposit; You acquired taxable bonds after 1987, you choose to reduce interest income from the bonds by any amortizable bond premium, and you are deducting the excess of bond premium amortization for the accrual period over the qualified stated interest for the period (see Bond Premium Amortization in chapter 3 of Publication 550); or You received tax-exempt interest from private activity bonds issued after August 7, 1986. 1040x tax return for prior year instructions Schedule B (Form 1040A or 1040). 1040x tax return for prior year instructions   You must complete Schedule B (Form 1040A or 1040), Part I, if you file Form 1040 and any of the following apply. 1040x tax return for prior year instructions Your taxable interest income is more than $1,500. 1040x tax return for prior year instructions You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier). 1040x tax return for prior year instructions You received interest from a seller-financed mortgage, and the buyer used the property as a home. 1040x tax return for prior year instructions You received a Form 1099-INT for U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bond interest that includes amounts you reported before 2013. 1040x tax return for prior year instructions You received, as a nominee, interest that actually belongs to someone else. 1040x tax return for prior year instructions You received a Form 1099-INT for interest on frozen deposits. 1040x tax return for prior year instructions You received a Form 1099-INT for interest on a bond you bought between interest payment dates. 1040x tax return for prior year instructions You are reporting OID in an amount less than the amount shown on Form 1099-OID. 1040x tax return for prior year instructions Statement (2) in the preceding list under Form 1040 is true. 1040x tax return for prior year instructions In Part I, line 1, list each payer's name and the amount received from each. 1040x tax return for prior year instructions If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer. 1040x tax return for prior year instructions Reporting tax-exempt interest. 1040x tax return for prior year instructions   Total your tax-exempt interest (such as interest or accrued OID on certain state and municipal bonds, including tax-exempt interest on zero coupon municipal bonds) and exempt-interest dividends from a mutual fund as shown on Form 1099-INT, box 8, and on Form 1099-DIV, box 10. 1040x tax return for prior year instructions Add these amounts to any other tax-exempt interest you received. 1040x tax return for prior year instructions Report the total on line 8b of Form 1040A or 1040. 1040x tax return for prior year instructions   If you file Form 1040EZ, enter “TEI” and the amount in the space to the left of line 2. 1040x tax return for prior year instructions Do not add tax-exempt interest in the total on Form 1040EZ, line 2. 1040x tax return for prior year instructions   Form 1099-INT, box 9, and Form 1099-DIV, box 11, show the tax-exempt interest subject to the alternative minimum tax on Form 6251. 1040x tax return for prior year instructions These amounts are already included in the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 10. 1040x tax return for prior year instructions Do not add the amounts in Form 1099-INT, box 9 and Form 1099-DIV, box 11 to, or subtract them from, the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 10. 1040x tax return for prior year instructions    Do not report interest from an individual retirement account (IRA) as tax-exempt interest. 1040x tax return for prior year instructions Form 1099-INT. 1040x tax return for prior year instructions   Your taxable interest income, except for interest from U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds and Treasury obligations, is shown in box 1 of Form 1099-INT. 1040x tax return for prior year instructions Add this amount to any other taxable interest income you received. 1040x tax return for prior year instructions You must report all of your taxable interest income even if you do not receive a Form 1099-INT. 1040x tax return for prior year instructions Generally, contact your financial institution if you do not receive a Form 1099-INT by February 15. 1040x tax return for prior year instructions Your identifying number may be truncated on any paper Form 1099-INT you receive. 1040x tax return for prior year instructions   If you forfeited interest income because of the early withdrawal of a time deposit, the deductible amount will be shown on Form 1099-INT in box 2. 1040x tax return for prior year instructions See Penalty on early withdrawal of savings in chapter 1 of Publication 550. 1040x tax return for prior year instructions   Box 3 of Form 1099-INT shows the interest income you received from U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds, Treasury bills, Treasury notes, and Treasury bonds. 1040x tax return for prior year instructions Add the amount shown in box 3 to any other taxable interest income you received, unless part of the amount in box 3 was previously included in your interest income. 1040x tax return for prior year instructions If part of the amount shown in box 3 was previously included in your interest income, see U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bond interest previously reported , later. 1040x tax return for prior year instructions   Box 4 of Form 1099-INT will contain an amount if you were subject to backup withholding. 1040x tax return for prior year instructions Report the amount from box 4 on Form 1040EZ, line 7; on Form 1040A, line 36; or Form 1040, line 62 (federal income tax withheld). 1040x tax return for prior year instructions   Box 5 of Form 1099-INT shows investment expenses you may be able to deduct as an itemized deduction. 1040x tax return for prior year instructions See chapter 28 for more information about investment expenses. 1040x tax return for prior year instructions   If there are entries in boxes 6 and 7 of Form 1099-INT, you must file Form 1040. 1040x tax return for prior year instructions You may be able to take a credit for the amount shown in box 6 unless you deduct this amount on line 8 of Schedule A (Form 1040). 1040x tax return for prior year instructions To take the credit, you may have to file Form 1116, Foreign Tax Credit. 1040x tax return for prior year instructions For more information, see Publication 514, Foreign Tax Credit for Individuals. 1040x tax return for prior year instructions U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bond interest previously reported. 1040x tax return for prior year instructions   If you received a Form 1099-INT for U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bond interest, the form may show interest you do not have to report. 1040x tax return for prior year instructions See Form 1099-INT for U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions savings bonds interest , earlier, under U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Savings Bonds. 1040x tax return for prior year instructions   On Schedule B (Form 1040A or 1040), Part I, line 1, report all the interest shown on your Form 1099-INT. 1040x tax return for prior year instructions Then follow these steps. 1040x tax return for prior year instructions Several lines above line 2, enter a subtotal of all interest listed on line 1. 1040x tax return for prior year instructions Below the subtotal enter “U. 1040x tax return for prior year instructions S. 1040x tax return for prior year instructions Savings Bond Interest Previously Reported” and enter amounts previously reported or interest accrued before you received the bond. 1040x tax return for prior year instructions Subtract these amounts from the subtotal and enter the result on line 2. 1040x tax return for prior year instructions More information. 1040x tax return for prior year instructions   For more information about how to report interest income, see chapter 1 of Publication 550 or the instructions for the form you must file. 1040x tax return for prior year instructions Prev  Up  Next   Home   More Online Publications