No, she will not have to pay tax on the amount of interest income you included on your tax return. I would recommend you providing that information to her so at the time she does cash the I Bonds and receives a 1099-INT for the full amount of interest earned on the bond, she can add an adjustment in TurboTax to reflect the amount of bond interest you already paid tax on. In TurboTax Online you can add this adjustment in the "Uncommon Situations" screen that is directly after you have entered your interest income.
- U.S. Savings Bond Interest: If you've been reporting your savings bond interest as you've earned it (instead of all at once when you redeem it) and you redeemed your bond this year, you may need to adjust the reportable interest to reflect only the interest reportable this year.
Click HERE for information from IRS publication 550
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