A complicated question that hopefully has a simple answer

Forum|Forum|6 years ago
March 7, 2020
7 replies
68 views

Hello! Last year my dad's Alzheimers became too much for him to handle his finances, but fortunately we have a power of attorney and so forth.

I found on taking over his finances that he was unaware of how taxes are paid on EE savings bonds he'd been holding in paper form, bringing them into the bank to cash when he needed money. Problem was, quite a few of the bonds he'd sold and still held had already matured, and having never held paper bonds I wasn't aware that the taxes were owed in the year of maturity, not the year of sale.

With his help, I put the bonds into TreasuryDirect, which promptly converted the matured bonds into a "C" bond that wasn't interest bearing.

So I sorted out everything, and refiled his 2016/2017/2018 returns to show the correct savings bond interest income including the freshly converted ones that had matured over the last few years, paid the back taxes and the interest/penalties and then...

...got a 1099-INT with all of the bond interest on it that I'd already amended/refiled and paid.

I *presume* I put all of that into turbotax, and somewhere there's a form or something or other that deducts 1099-INT already paid in a prior year?

Is it also helpful to write a short letter or fill out some form explaining the mechanics of what happened?

I also presume I can sign his returns with the POA (which is all encompassing, every box checked) or do I need to attach the POA? Didn't get that far yet.

Any help on this presumably odd occurrence is most welcome. Thank you.

Best answer by ReginaM

To adjust your reportable interest to reflect only the interest reportable this year in TurboTax, follow these steps:

1. While in your Tax Home,

2. Select Search from the top right side of your screen,

3. Enter 1099-Int,

4. Select Jump to 1099-Int,

5. Follow the On-Screen Prompts to complete this section.

6. When you get to this screen, stating Do any of these uncommon situations apply, check the box:

Hopefully this helps!

HPFMTax

Level 5

POA for IRS would be Form 2848 and an explanation is needed for that new 1099INT....there's no form that deducts the amounts from past years.

cfbcfbAuthor

Level 2

I looked at that POA form yesterday and it appears that the taxpayer has to sign it. Which he can't because he's legally disabled from making financial decisions. This is a common catch-22 that I've been able to get around, banks like to do it as well. Looks like the second page has info to report that I'm a family member representative, but I'm not sure if it would still require my dads signature (that he can't legally give) to be in effect.

So in the absence of a method to handle the previously paid interest, do I put all of it in, write a letter and just staple it on the front of the return, and pay the correct amount or pay the full amount and wait for the wheels at the IRS to turn and refund a portion of it as already paid?