I have a similar situation.
Has anyone nailed the correct precise answer on this?
My understanding is Bonds started to be covered in 2014.
I have a Muni Bond that is tax exempt.
Purchased in 3/6/2014. Says "SER 2012" I imagine that means it was issued in 2/14/2012. I paid the full price of the bond + accrued interest of $111.11 and a minimal processing fee.
"DUE 2036"
It was Called 12/1/2021.
On IRS.gov website regarding the information on bonds, it sounds as though there is a choice between paying tax on the "interest" yearly or at the time the bond is cashed out.
If the yearly option is chosen, the IRS has to approve using method of paying tax at the end of the life of holding the bond. WHEW!
I can not tell which method was used. (I have another bond whose taxable interest is listed every year)
Looking back through tax returns H&R Block from 2014 forward, the interest has been entered in the Tax Exempt box, less ? it looks like ? Bond Premium which was listed on line 11.
On years when Bond premium was listed on line 13, the amount wasn't deducted.(sometimes)
I haven't received the tax form yet for 2021.
Since there seems to be a choice of when to report ?? and pay tax on the interest on Bonds, and if the amount reported on the form is the entire amount of interest over the time I have held the bond (as I think it has been covered the entire time) and then... how capital gains or losses play into it...
I am attempting to understand it before the form gets here!
The bond that was called was Tax Exempt, however, I do have one that is Not tax exempt and want to understand the implications and details of tax reporting while holding bonds.
I have read the IRS info, but find it unclear. When they are talking about yearly or at maturity - does that apply to both tax exempt and corporate bonds?
I would like to avoid paying double tax! & am attempting to understand all the brackets that affect taxation so as not to be bumped unnecessarily into a higher bracket after retirement.
