In what year should I report interest income if I received a 1099-INT from IRS but the original check was not cashed within 1 year and had to be reissued?

[robertlo87]

I have the following situation:

In February 2023 IRS issued me a check that included a return for a previous year and some interest on it. Early in 2024 they sent me a form 1099-INT showing this interest as 2023 income.

However, I forgot to cash the check within 1 year of receiving it, and I have just received an IRS notice telling me that they have just send me a new check to replace the one that expired last month. I then checked the account transcript corresponding to that return’s year, and the transactions shown there are now as follows:

• 02-vv-2023: 846 Refund issued
• 02-xx-2023: 776 Interest credited to your account
• 02-xx-2023: 740 Undelivered refund returned to IRS
• 02-xx-2023: 777 Reduced or removed interest credited to your account
• 03-yy-2024: 846 Refund issued
• 03-zz-2024: 776 Interest credited to your account
• 03-zz-2024: 971 Notice issued

What confuses me is that the IRS reported the transaction with code 777 for the same date in which the interest had originally been credited to my account in 2023, and then a new transaction with code 776 in March 2024. I am aware that when receiving income via check what matters is the date when you receive the check and not the date when you cash it, so I am wondering: should I still consider that I received that income in 2023 and report it in my 2023 tax return? Or should I ignore the 1099-INT and wait for a new one for 2024? 

Thank you for your help

[ThomasM125 · Accepted solution]

You should report the interest in the year the funds were available to you, which would be in 2023 in this case it would seem. It doesn't matter that you didn't cash the check, you could have cashed it in 2023, so the income belongs in that year.