When I cashed bonds the U.S. Treasury sent me an invoice for $655.40 for debt which I paid but I now received a 1099-Int from the bank with $810.80.

[AnnetteB6]

The interest from the bank represents the amount of interest that had accrued on the bonds that you cashed.  This must be reported on your tax return as interest income.  The interest income will be taxed on your Federal return, but will be exempt from state taxes since the interest was earned on a US Government bond.

Use these steps:

• On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
• This opens a box where you can type in “interest income” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
• The search results will give you an option to “Jump to interest income”
• Click on the blue “Jump to interest income” link and enter your information