Since you received the income and paid it back in the same year, you will need to report both. Follow these steps:
- Open your return
- Go to federal income
- Enter the 1099-int.
- continue to Tell us if any of these uncommon situations apply
- Select I need to adjust the taxable amount
- continue
- Enter the full amount of interest paid back and select This savings bond interest was previously reported.
- continue
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