Series H Saving Bonds

[Thad]

The client received a 1099-INT indicating $16000 of accrued interest. She has data that will show that since 2004, she was reporting the interest as required by regulation. I was also under the impression that if the interest is reported as it is accured, then there is no reporting requirement once you cash the saving bond. In my case, we own Series EE bonds and as they accure interest, we ride it out and report the interest when the bond is cashed. The ultimate question is, how is the $16000 reported on the tax return if the client has already paid the appropriate taxes on it as it shows on her tax return. Thanks for any help.

[DaveO]

Series H bonds were issued only to holders of mature E or EE bonds. The accrued interest is the interest earned by the bonds as E or EE bonds. Unless paid by the taxpayer at time of conversion this is reported as accrued interest and is fully taxable on redemption. The interest reported each year was the interest earned as H bonds.