I-bond redemption to pay for higher education of a dependent

[gm-71003]

Hello,

I redeemed some I-bonds (in 2023) to pay for my son's college education tuition in 2023. Where / which section

in Turbotax can I exempt the I-bond interest for higher education? I am using the Turbo tax desktop premier 2023 product. 

Thanks.

[Hal_Al]

In TurboTax (TT), enter at:
- Federal Taxes tab (Personal in  Home & Business)

 - Wages & Income

Scroll down to:

-Interest & Dividends

  -Interest on a 1099-INT

At the 1099-INT screen, click that you have more than box 1 on your 1099-INT.  When you enter your interest in box 3, at that screen, TT will automatically generate the education interest exclusion interview. 

Here's something to consider, for the future: 

Room and board are not qualified expenses for the savings bond interest  educational exclusion.

Room and board are qualifying expenses for a 529 plan distribution to be tax free,

A 529 plan contribution is a qualified expense for the proceeds of  cashing savings bonds. The "rollover" must be done within 60 days and in the same calendar year. 

Reference: https://www.savingforcollege.com/article/how-to-rollover-us-savings-bonds-into-a-529-plan

[gm-71003]

Thanks for your response. My 1099-INT from Treasury has only Box 1. Box 3 is empty. In TT, should I

enter the I-bond interest part of amount (already in Box 1) also in Box 3?  If I do this, it takes me to

the next screen - "Tell us if any of these uncommon situations apply" and underneath it the only

one that makes sense seems to be "We need to adjust the taxable amount". But selecting that

does not show any option to exclude the interest for education. Not clear what i am missing..

[Hal_Al]

Q. In TT, should I enter the I-bond interest part of amount (already in Box 1) also in Box 3? 

A. No. You should break out  the I bond interest and enter it only in box 3. 

It sounds like you got a 1099-int from a bank or broker, rather than from the US Treasury direct.  They should know better than to include  US Treasury interest in box 1.  You may want to consider contacting them for a corrected 1099-INT. 

[gm-71003]

My bad. The 1099-INT from Treasury direct has the interest on Box 3, not Box 1. All other boxes

are empty. However, TT does not take me to any education interest exclusion interview. The screen

it takes me to is:

"Tell us if any of these uncommon situations apply" and 4 options to select from:

-We need to adjust the taxable amount

-State income taxes were withheld on this interest

-Our state doesn't tax all of this interest

-None of these apply

The product i'm using is TT Desktop Premier 2023. 

[Hal_Al · Accepted solution]

At that screen, check none of these apply.

Click continue

At the "Here's the interest we have so far" screen, click Done

The next screen should be "Did you use your US Savings Bonds to pay for higher education Expenses", click YES

Follow the interview

[gm-71003]

Perfect, that worked. Thanks again!

[ritapun]

I am using Turbo Tax Premium 2024. I have the same question as the poster above, however the solution does not work for me. When I click on None of the above, it does not take me to a screen about education expenses. How do I use the redemption of I-Bond for paying for education ?

[Hal_Al]

Be sure the interest is entered in box 3 at the 1099-int screen. 

[ritapun]

Yes. Its on Box 3. On continue,  It takes me to this screen with the question: "Do any of these uncommon situations apply?".  On checking "None of these apply", and pressing continue, nothing happens.

[Hal_Al]

Delete the 1099-INT and re-enter it, manually. 

[MarilynG1]

If you're using TurboTax Online, close the program, clear your  Cache and Cookies and step through the interest entry again.  This should bring up the correct next screen for you.

If you're using TurboTax Desktop, try a Manual Update and return to that section, or you can make the entries yourself on the Interest Worksheet in FORMS mode.

@ritapun