Short answer?
For US Govt bonds...you can do both:
1) You put the amortizable amount of the premium you paid for the bond(s) in box 12 of the 1099-INT
2)..... then on the follow-up page you only need indicate you have Accrued interest that you paid to the seller when you bought the bond(s)...and only enter the accrued interest there.
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Longer discussion:
1) Many brokerages (if bought thru an account) would already have the amortizable premium amount in box 12 of the 1099-INT they issued. (if from within a Treasury Direct account, I'm not sure what they show on their 1099-INT).
2) If it was from a brokerage issued 1099-INT, that has some combination of boxes 1, 3 & 8 $$ in that 1099-INT, then you need to remove any box 3 and 12 values from that 1099-INT, and create a separate 1099-INT with only the box 3, 12 values, and the accrued interest on that separate 1099-INT.....if you don't, then the software will (improperly) apportion the accrued interest among whatever $$ values are in boxes 1, 3 & 8.
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
