Amortization

[Teresa6672]

I received a 1099-INT tax form with a statement indicating that there is unrealized cost basis information for a security subject to amortization as of 12/31/2024, showing an amount of -150.87.

Should this amount be manually entered in Box 12 of the 1099-INT form? When I enter it, the total interest does not change. However, when I enter 150.87 in Box 11, the total interest decreases.

Why does TurboTax ignore the amount in Box 12 but adjust the total interest when entered in Box 11?

What should I do?

[DianeW777]

It depends. This number will be used when you cash or redeem the financial instrument. It will be added to the cost basis so you will have little to no gain or loss on the redemption. If this is part of the interest you paid to purchase the bond, because you bought it after it was originally acquired, then you can use it to reduce the interest income and place it  in box 11. If you did not acquire the bond at a premium, then do not enter it in box 11, but use box 12 as indicated on your 1099-INT.

Instructions Form 1099-INT:

For a U.S. Treasury obligation that is a covered security, enter the amount of bond premium amortization allocable to the interest paid during the tax year, unless you were notified in writing that the holder did not want to amortize bond premium under section 171. See Regulations sections 1.6045-1(n)(5) and 1.6049-9(b). If you are required to report bond premium amortization and you reported a net amount of interest in box 3, leave this box blank.