Hi, I'm preparing the final return for my mother who passed in 2019. I inherited several EE Savings Bonds from her, but they have not been redeemed yet, so there is no 1099-INT form from the government to use.
I would like to pay taxes on all the interest that accrued thru my mother's death. Then when I redeem the bonds in a couple years, I'll only have to pay taxes on a few years worth of interest that accrued since her passing.
What is the proper way to document this in TurboTax? Thanks!
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To report the interest on the savings bond each year in TurboTax:
You report the amount all interest earned to date, unless previously reported, on your mother's final return. In fact, if the bonds are re-issued in your name, you must report the interest that way.
See IRS Publication 550 for the details on reporting US savings bond interest. It includes these instructions for how to report the 1099-INT you will receive when the bond is redeemed (i.e., when you ultimately receive the 1099-INT for the savings bonds):
"On Schedule B (Form 1040), Part I, line 1, report all the interest shown on your Form 1099-INT. Then follow these steps.
Note that TurboTax will do this for you, if you select the "I need to adjust the interest reported on my form" box, on the screen after you enter the 1099-INT.
This US Treasury website has a good summary of the taxation of savings bond interest.
Thanks David!
Couple follow-ups after playing around with TurboTax.
1. What do I put in "Received from" - the first box?
2. What do I put for payer's Federal ID Number (FEIN)?
3. The bonds were originally my grandfather's and the accrued interest was paid on his death. So I put in the full interest amount and then entered an adjustment amount equal to the interest that was taxed on my grandfather's final return. Is that correct? After re-reading your post, I see you wrote "You report the amount all interest earned to date, unless previously reported, on your mother's final return. "
Can you clarify the best way to handle this situation?
Thanks again!
You would enter "United StatesTreasury" for the name, I don't believe TurboTax asks you to enter the federal ID number.
You would subtract out the amount of any interest previously reported on a tax return.
TurboTax definitely does ask for the FEIN in this case. Do I leave it blank, or does Treasury have a FEIN I need to use?
The EIN is not required when entering interest income. See this.
TurboTax repeatedly gives the error message saying the Federal Identification Number (FEIN) is required for "United States Treasury" for ee bond interest. I have found no way around this.
You can always mail your tax return this year. No FEIN is needed when your return is mailed.
I called US Treasury Direct. The US Treasury Department's FEIN is 53-0197074
Is this reported on "Box 1 - Interest Income" or "Box 3 - Interest on US Savings Bonds and Treasury obligations"?
This is reported on Box 3 - Interest on US Savings Bonds and Treasury obligations.
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