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Level 1

Claiming Savings Bond interest from dead beneficiary

My mother died 08/2015 and she had uncashed US Savings Bonds in her name (primary) OR my name.

I cashed the bonds in 2015 and received a 1099 for the interest - do I have to claim the interest or can I have my mother's estate claim the interest on these bonds?

If so, how do I do this?

Thanks for your help,

Jim

1 Best answer

Accepted Solutions
Level 7

Claiming Savings Bond interest from dead beneficiary

If the transferred bonds were owned by a decedent who had used the cash method and had not chosen to report the interest each year, and who had bought the bonds entirely with his or her own funds, all interest earned before death must be reported in one of the following ways.

1.The surviving spouse or personal representative (executor, administrator, etc.) who files the final income tax return of the decedent can choose to include on that return all interest earned on the bonds before the decedent's death. The person who acquires the bonds then includes in income only interest earned after the date of death. 

2.If the choice in (1) is not made, the interest earned up to the date of death is income in respect of the decedent and should not be included in the decedent's final return. All interest earned both before and after the decedent's death (except any part reported by the estate on its income tax return) is income to the person who acquires the bonds.

Once you figure out how much will be reported on your tax return you can report your share of the interest as follows.

  • In TurboTax Premier -
  • Federal Taxes tab > Wages & Income > Interest & Dividends > Interest on 1099-INT (even without form)
  • Yes > I'll type myself > Click the box "my form has info in more than just box 1"
  • Enter the bond interest in box 3 (click the screenshot to enlarge & view)

2 Replies
Level 7

Claiming Savings Bond interest from dead beneficiary

If the transferred bonds were owned by a decedent who had used the cash method and had not chosen to report the interest each year, and who had bought the bonds entirely with his or her own funds, all interest earned before death must be reported in one of the following ways.

1.The surviving spouse or personal representative (executor, administrator, etc.) who files the final income tax return of the decedent can choose to include on that return all interest earned on the bonds before the decedent's death. The person who acquires the bonds then includes in income only interest earned after the date of death. 

2.If the choice in (1) is not made, the interest earned up to the date of death is income in respect of the decedent and should not be included in the decedent's final return. All interest earned both before and after the decedent's death (except any part reported by the estate on its income tax return) is income to the person who acquires the bonds.

Once you figure out how much will be reported on your tax return you can report your share of the interest as follows.

  • In TurboTax Premier -
  • Federal Taxes tab > Wages & Income > Interest & Dividends > Interest on 1099-INT (even without form)
  • Yes > I'll type myself > Click the box "my form has info in more than just box 1"
  • Enter the bond interest in box 3 (click the screenshot to enlarge & view)

Highlighted
Level 20

Claiming Savings Bond interest from dead beneficiary

THE SSN in the "Recipient's TIN" box is the one who has to claim/report the interest. That's the bottom line since the bonds were your mother *OR* you. That *OR* word makes all the difference in the world.