EE E Bonds

[luke]

I have client who redeemed EE & E Bonds in 2011 - The bonds actually matured in 2007, 2008, 2009, 2010 & 2011 - For 2011, Client received multiple 1099-INTs (1 for each set of bonds) - we are "required to report bond interest in the year bond reaches final maturity OR the year its redeemed , WHICHEVER OCCURS 1st" - It would seem that I need to go back and AMEND the tax returns for the previous years to report interest earned (but not previously reported?) - this will save client several thousand dollars since the taxable income was small in those previous years! My problem is how do I show that the 1099-INTs received for 2011 are actually being reported on an amended return? (IRS will certainly be "matching" 1099-INTs to 2011 tax return)?

[RitaB]

I believe

I have client who redeemed EE & E Bonds in 2011 - The bonds actually matured in 2007, 2008, 2009, 2010 & 2011 - For 2011, Client received multiple 1099-INTs (1 for each set of bonds) - we are "required to report bond interest in the year bond reaches final maturity OR the year its redeemed , WHICHEVER OCCURS 1st" - It would seem that I need to go back and AMEND the tax returns for the previous years to report interest earned (but not previously reported?) - this will save client several thousand dollars since the taxable income was small in those previous years! My problem is how do I show that the 1099-INTs received for 2011 are actually being reported on an amended return? (IRS will certainly be "matching" 1099-INTs to 2011 tax return)?

I think you'll be just fine to enter the total interest on Sch B, then under it, subtract what you are reporting in other years with an explanation, like "Reported in Prior Years According to Maturity Date" or some such.

[Nashville]

2011 is OK

Let's follow what the bank is saying...they have to report the interest upon maturity or redemption, WHICHEVER COMES FIRST. This means whatever matured in prior years should have been reported on 1099-INT in those prior years.

And 1099-INT for 2011 is correct for 2011.

[ddoshan]

Have you read Pub 550 about series E EE bonds. I was just quickly skimming and got the impression that the maturity for EE bonds is 2011. And for the first E bonds it was 2010.

[RitaB]

Bank doesn't know

Let's follow what the bank is saying...they have to report the interest upon maturity or redemption, WHICHEVER COMES FIRST. This means whatever matured in prior years should have been reported on 1099-INT in those prior years.

And 1099-INT for 2011 is correct for 2011.

The bank doesn't know when the bond matured. Well, maybe after it's cashed, they know. And the bond could be cashed at any bank.

The IRS is saying report it the year it matures or the year it's redeemed, whichever comes first.

[luke]

THANKS Rita

Thanks Rita - I was just a little worried that "explanation" would not be enough but I guess I'll just have to get ready to start answering IRS letters?

[luke]

sorry

Let's follow what the bank is saying...they have to report the interest upon maturity or redemption, WHICHEVER COMES FIRST. This means whatever matured in prior years should have been reported on 1099-INT in those prior years.

And 1099-INT for 2011 is correct for 2011.

Thanks but that is not the way it works - banks ONLY send 1099-INT when bond is redeemed (thats why I have 5 years worth for 2011)

[RitaB]

Just document

Thanks Rita - I was just a little worried that "explanation" would not be enough but I guess I'll just have to get ready to start answering IRS letters?

Just keep your proof in the file. Doubt you will need it. Actually the amended returns ought to be the big red truck for them.

[peggysioux]

Series E Savings Bonds

If IRS states that bond interest is to be reported upon maturity or redemption, WHICHEVER COMES FIRST, but taxpayer did not report in prior years and has now cashed in many bonds in 2011 with maturity dates ranging from 2003 through 2008;
wouldn't you just claim in 2011?