Situation: Relative A reported that 30 US savings bonds were misplaced/lost in 2015. After searching, in 2016 A filed with the US Treaury to have the 30 bonds replaced and in addition to having the 30 replaced, relative A also cashed them in at that time. Interest was reported on A's 2016 tax return and taxes were paid. In 2024, relative A is older now, a little diminished in capacity, and A "found" the 30 "lost" bonds while going through some boxes and subsequently took them to a local bank and cashed them. A received the interest on the 30 bonds during 2024 and later in early February 2025 A receinved a 1099-INT from the bank to report the US bond interest income on A's 2024 tax return. Later that same week in February 2025, A received a debt collection letter from the US Treasury stating that the 30 bonds had already been cashed and therefore A owed the Treasury not only the interest that was paid (as listed on the 1099-INT) but also the principle from the 30 bonds since A also received those funds along with the interest. After verifying the debt letter was legal, A repaid the whole debt amount owed to the US Treasury around the middle of February, 2025.
In this situation, A is planning to report the 1099-INT form interest paid to A by the bank as well as listing the principle income as a misc income amount on A's 2024 tax return so this will include all of the funds that A received as income from the 30 bonds in 2024.
Question: how and when does A report the repayment of this debt to the US Treasury on A's tax return? Since A has not yet filed A's 2024 return, can A claim a corresponding deduction amount on A's 2024 return since the whole repaid (interest and principle) amount was for the 2024 debt? If A can claim the repayment as a deduction on the 2024 return where would it be claimed using turbo tax drop downs and or on which forms? Could the total amount of the repaid debt (interest and principle) be entered as a misc deduction under deductions and credits or somewhere else? OR because the 2024 debt was repaid in 2025 are we dealing with a situation where the 2024 has to be filed with the 1099-INT and the overpaid principle as misc income without the 2025 repayment being included in the 2024 return and then the debt repayment has to be reported and claimed on the 2025 return since it was repaid in 2025? If so, then how would that repayment be reported on the 2025 tax return and on which line and or which form?
All assistance greatly appreciated.
