1099-INT - Treasury - TIPS - Bond Premium, Interest, and Adjustment

[FederalInquirer]

Hello,

I'm entering my 1099 from TreasuryDirect.gov. It has only my T.I.P.S. information:

Box 3 (savings bonds and Treasury interest): $6.62

Box 12 (bond premium on Treasury obligations): $60.37

All other boxes are $0 or empty

I entered these amounts in the correct boxes in TurboTax, but when I'm almost done, its "smart check" runs, and shows this error message:

"Schedule B Form 1099-INT (TreasuryDirect) The 'bond premium adjustment' of $60.37 is greater than the related Box 3 'interest on savings bonds and Treasury obligations' of $6.62. You must reduce the bond premium amount reported to the amount of Box 3, and report any excess on Schedule A"

Huuuuh!?  Wow the government makes me feel dumb :(

a) Should I change box 12 to $6.62 even though the form I received from the Treasury says $60.37 ?

b) Where in Schedule A should the excess be entered?

c) Should the difference $53.75 (= $60.37 - $6.62) be entered as a positive or negative number in Schedule A ?

Any help on how to enter this information correctly will be greatly appreciated

Best regards,

Nick

[ThomasM125 · Accepted solution]

Yes, you should change box 12 to $6.62, the amount of your interest income, as that is the most you can deduct for bond premium amortization. The balance you can enter in the Deductions and Credits section, then Other Deductions and Credits, then Other Deductible Expenses. It will be included in with your itemized deductions, assuming you will benefit from that. 

[FederalInquirer]

Hi Tom,

Thank you! I had purchased these 10 yr TIPS b/c of inflation, but I'm kind of regretting doing that... Besides the length of the investment, and not paying much, they complicate my taxes :(

The good thing is that your explanation will help me for 9 more years! 🙂

Sincerely appreciated,

Nick