Can I Claim Accrued Interest Paid on Bonds a Year Later?

[FlyingCat]

I purchased five different US Treasury Bonds in 2022; and I started receiving interest payments from these 5 bonds in 2022. However, I did NOT subtract "Accrued Interest Paid on Purchase" for these bonds in form 1099-B in my 2022 Taxes.

Since I also received interest payments from these five bonds in 2023, can I subtract the "Accrued Interest Paid on Purchase" for these bonds using from 1099-B in my 2023 tax return?

Thank you in advance.

[MarilynG1]

If you receive a 1099-INT to report Bond Interest, after entering your 1099-INT, Continue to 'Tell Us if any of these Uncommon Situations Apply' (might be a couple screens in).

Choose 'we need to adjust the taxable amount'.  On the next page titled, 'Report Interest Adjustment', you can enter an interest adjustment for Accrued Interest Paid. 

Here's more info on Accrued Interest Adjustment. 

[FlyingCat]

Thank you for your prompt reply.

Currently, I have only entered the "accrued interest paid on (new bond) purchases" I made in 2023 in the "Report Interest Adjustment" page you have shared above; i.e., the accrued interest included in my 2023 1099-INT form.

Is it OK to also include the accrued interest paid on bonds I purchased in 2022, even if the 2022 accrued interest in not included in my 2023 1099-INT form?  The 2022 accrued interest was included in my 2022 1099-INT form, but I did not subtracted it when I file my taxes last year.

If I include the 2022 accrued interest in 2023, then it is not 100% accurate to select the option "My accrued interest is included in this 1099-INT form" because I would be including the 2022 and the 2023 accrued interest paid on bond purchases. 

For example, if my accrued interest paid in 2022 was $500, and my accrued interest paid in 2023 was $800, and only the $800 are included in my 2023 1099-INT. Are you saying I can claim ($500 + $800) as accrued interest in 2023 and select the option "My accrued interest is included in this 1099-INT form"?

Thank you in advance for your clarification.

[Mike9241 · Accepted solution]

you were required to deduct the accrued interest paid to the extent of interest received in 2022 (bond by bond). if you didn't get any interest in 2022, the full amount of accrued interest can offset the interest received in 2023.

if you didn't deduct the accrued interest paid in 2022 to the extent received you can only use the portion that would be left in 2023. you can go back and amend 2022 if it's worthwhile. 

[FlyingCat]

Thank you for your reply.

I will only claimed accrued interest paid for bond purchases in 2023, only the ones that started paying interest in 2023, in my 2023 tax return.

Once I get my refund from 2023 taxes, I will file an amend to my 2022 taxes to claim the accrued interest I paid in 2022.

[VMOO]

Hello, 

Sorry, I'd like to make sure I understand your message below correctly. 

you were required to deduct the accrued interest paid to the extent of interest received in 2022 (bond by bond). if you didn't get any interest in 2022, the full amount of accrued interest can offset the interest received in 2023.

Are you saying that I can only deduct the accrued interest paid on purchased items with CUSIP numbers that match the ones listed in the U.S. Savings Bonds & Treasury Obligations Interest (Included in Box 3)?

I can't find the CUSIP numbers for the accrued interest paid on purchased items in my Form 1099 summary under the Total U.S. Savings Bonds & Treasury Obligations Interest (Included in Box 3) section. What happened to the accrued interest paid on purchased items, the interest that I did pay in 2023 for those bond? When do I get to deduct them?     

Thank you. 

[DianeW777]

It depends.  It may not be necessary to find the CUSIP numbers however you would know what you paid in accrued interest for each bond and the interest earned on each bond.

Report in interest income the amount that is above and beyond your accrued interest portion of the purchase price.

Please update here if you have more questions and we can help.

@VMOO