Like @DaveF1006 kind-of implied....you wait until your 2023 tax return to report it.
Your 1099-INT for that year will show the full interest for everything you own at that brokerage, in boxes 1,3,8.....then there is a follow-up page where you check a box, indicating you have an adjustment to make, and on another page you check the box for accrued interest, and enter the amount accrued interest amount you paid to the seller....effectively reducing the interest reported as being received
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And then the complications
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...........another issue potential accrued interest issue...if your 1099-INT is a mix of box 1, 3, and 8 in any combination. Then the all the bond interest for that bond type should be removed from that combined 1099-INT and entered on its own 1099-INT. (not needed if you have no accrued interest to report on any of them)
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Example: You bought a Muni bond , and paid the seller for the accrued interest that you will report for 2023. The Muni bond interest is reported in box 8, but that 1099-INT might also have box 1 and/or box 3 $$ on it. You need to remove all of the box 8 $$ (along with boxes 9 & 13, if any) and put box 8 (and 9&13) onto it's own 1099-INT before indicating it's accrued interest. IF you don't, the accrued interest will be divided up proportionately (and improperly) among boxes 1, 3, and 8
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At least, that's how it's handled for tax-exempt Muni Bonds.
For Muni bonds, any Premium amortization (for any premium you paid, other than the accrued interest) will be reported in box 13
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
