How to adjust previously reported bond interest?

Forum|Forum|1 year ago
February 22, 2025
2 replies
36 views

I entered the adjustment for previously reported bond interest and got an error message: the program does not support this kind of adjustment to Special handling interest.

DianeW777

Alumni - Intuit

It depends. If your bond has been redeemed then it is reported as a sale of an investment asset. When this occurs, then you use any previously reported interest as part of your cost basis of the bond. In most cases the cost and sales price are the same because you have reported interest as it accrued.

To enter your sale in TurboTax, follow these steps. Click this link for more information. Where do I enter Investment Sales?

Open or continue your return.
Navigate to the investment sales section:
- TurboTax Online/Mobile: Go to investment sales. If using this application, make sure it is open
- TurboTax Desktop: Search for investment sales and then select the Jump to link.
  - Or Personal Tab > Continue > I'll choose what I work on > Scroll to Investment Income > Select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other
Answer Yes to the question Did you sell any of these investments in 2024? (or Okay! to Time to kickoff your investments!).
- If you land on the Investment sales summary or Your investments and savings screen, select Add More Sales or Add investments.

For more information please update with additional details and we will help.

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mn296Author

Level 2

Thank you for your reply. But your answer was not correct. Please see below

IRS Publication 550 (2024)

U.S. savings bond interest previously reported. If you received a Form 1099-INT for U.S. savings bond interest, the form may show interest you do not have to report. See Form 1099-INT for U.S. savings bond interest, earlier.

Publication 550 (2024), Investment Income and Expenses | Internal Revenu...

On Schedule B (Form 1040), Part I, line 1, report all the interest shown on your Form 1099-INT. Then follow these steps.

1. Several rows above Schedule B (Form 1040), Part I, line 2, enter a subtotal of all interest listed on Schedule B (Form 1040), Part I, line 1.

2. Below the subtotal, enter “U.S. Savings Bond Interest Previously Reported” and enter amounts previously reported or interest accrued before you received the bond.

3. Subtract these amounts from the subtotal and enter the result on Schedule B (Form 1040), Part I, line 2.

Example 1.

Your parents bought U.S. savings bonds for you when you were a child. The bonds were issued in your name, and the interest on the bonds was reported each year as it accrued. See Choice to report interest each year, earlier.

In March 2024, you redeemed one of the bonds—a $1,000 Series EE bond. The bond was originally issued in March 2005 for $500.00. When you redeemed the bond, you received $732.80 for it.

The Form 1099-INT you received shows interest income of $232.80. However, since the interest on your savings bonds was reported yearly, you need only include the $6.40 interest that accrued from January 2024 to March 2024.

On Schedule B (Form 1040), Part I, line 1, enter your interest income as shown on Form 1099-INT—$232.80. If you had other taxable interest income, you would enter it next and then enter a subtotal, as described earlier, before going to the next step. Several rows above Schedule B (Form 1040), Part I, line 2, enter “U.S. Savings Bond Interest Previously Reported” and enter $226.40 ($232.80 − $6.40). Subtract $226.40 from $232.80 and include $6.40 on Schedule B (Form 1040), line 2. Add this amount to your subtotal (if any) and in the total on Schedule B

Turbotax need to correct the bug in the software and take out the error message and allow "interest preciously reported"

mn296