What year is Series EE savings bond interest taxed

[jfr09]

A 30 year Series EE paper savings bond matured in January 2023. However it wasn’t cashed until April 2024. Should the interest be included in tax year 2023 or 2024?   In a related question, will the bank that cashed it send a 2023 1099-INT or a 2024 19=099-INT.

Thanks.

[RachelW33]

The interest should be included on your 2023 tax return.  You must report the interest from Series EE Savings bonds when you cash them OR when they reach maturity, whichever occurs first.  

The bank will send you a 2024 1099-INT.  To avoid paying tax on the amount twice, when you include the interest on your 2024 tax return (to match IRS records) you can include a negative adjustment for the same amount of interest to zero it out.

[jfr09]

Rachel 

Thank you. So is the bank wrong - by sending a 2024 1099-INT?  Also, is there an Internal Revenue Code reference that covers this situation?

Thanks again.

[VolvoGirl]

No the bank isn't wrong.  They don't know when your bonds matured, just when they paid you the interest.  It's up to you to report it right.   By the way be sure to enter the interest in 1099-INT box 3 so it's properly subtracted from the state return.

My old notes say.......

When your Series E Bond matures you have to report the interest even if you don't cash it in. It took a while of searching but I did find a line in IRS pub 550 that said report at maturity. So it sounds like you have to report it. If you have to pay the tax and since it doesn't accrue any more interest, you might as well cash them in and put the money somewhere else or I think you can trade it in for a H bond that pays you the interest every 6 months.

See IRS pub. 550 page 10 for 10 U.S. Savings Bonds - Reporting options for cash method taxpayers 

 http://www.irs.gov/pub/irs-pdf/p550.pdf

It says…..
Reporting options for cash method taxpayers. If you use the cash method of reporting income, you can report the interest on series EE, series E, and series I bonds in either of the following ways.

Method 1. Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year in which they mature. Note. Series E bonds issued in 1980 matured in 2010. If you have used method 1, you generally must report the interest on these bonds on your 2010 return.

[jfr09]

Thank you again.  I appreciate the help.

For what its worth, I think the bank did know when the bond matured.  It was a paper bond and marked as maturing January 2023. So they had that in front of them when it was cashed last week. The proceeds have been reinvested.

Of course, Form 1099 has not been received yet.  But I'll look for a 2024 1099-INT  to eventually show up from the bank.