CesarJ
Employee Tax Expert

Get your taxes done using TurboTax

When you redeem a US Treasury note, only the interest earned is taxable, not the return or your original investment.

 

What's reported to the IRS is the interest portion only, usually on a 1099-INT (or sometimes as interest included with the redemption). 

 

Your original principal isn't income and doesn't get reported on Form 1040.

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