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Query about savings bonds beyond final maturity
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MZB
Apr 29, 2022, 11:54:13 AM4/29/22
to
A few questions about a savings bond that is over the 30-yr final
maturity thresshold. Assuming one has not declared any interest to date:
1) Am I correct that the total interest must be declared in year 30?
2) If so, then for a bond say 32 years old, the taxpayer must amend his
30th year return. Right? But what about a 40 year old bond? Does one
actually have to amend a return from 10 years ago?
Mel
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maturity thresshold. Assuming one has not declared any interest to date:
1) Am I correct that the total interest must be declared in year 30?
2) If so, then for a bond say 32 years old, the taxpayer must amend his
30th year return. Right? But what about a 40 year old bond? Does one
actually have to amend a return from 10 years ago?
Mel
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
Bob Sandler
Apr 29, 2022, 3:44:14 PM4/29/22
to
>A few questions about a savings bond that is over the 30-yr final
>maturity thresshold. Assuming one has not declared any interest to date:
>
>1) Am I correct that the total interest must be declared in year 30?
>
>2) If so, then for a bond say 32 years old, the taxpayer must amend his
>30th year return. Right? But what about a 40 year old bond? Does one
>actually have to amend a return from 10 years ago?
Technically you're right, but I don't think anybody does
>maturity thresshold. Assuming one has not declared any interest to date:
>
>1) Am I correct that the total interest must be declared in year 30?
>
>2) If so, then for a bond say 32 years old, the taxpayer must amend his
>30th year return. Right? But what about a 40 year old bond? Does one
>actually have to amend a return from 10 years ago?
that. When you cash the bonds you will get a 1099-INT for
the year that you cashed them. So to keep things simple, you
report the interest in that year. If you report the interest
in an earlier year, initially or by amending, you still have
to report the 1099-INT in the year you cash the bonds. Then
you have to make some sort of offsetting entry and hope that
the IRS doesn't question it.
The IRS doesn't seem to go after interest that's not
reported in the year of maturity. I've never heard of anyone
getting an IRS notice about that. As long as the interest
you report matches your 1099-INT forms, the IRS is happy.
Bob Sandler
BignTall
Apr 29, 2022, 4:59:15 PM4/29/22
to
On 4/29/2022 10:49 AM, MZB wrote:
> A few questions about a savings bond that is over the 30-yr final
> maturity thresshold. Assuming one has not declared any interest to date:
>
> 1) Am I correct that the total interest must be declared in year 30?
>
> 2) If so, then for a bond say 32 years old, the taxpayer must amend his
> 30th year return. Right? But what about a 40 year old bond? Does one
> actually have to amend a return from 10 years ago?
>
> Mel
>That is a really good question. After the savings bond is cashed in,
> A few questions about a savings bond that is over the 30-yr final
> maturity thresshold. Assuming one has not declared any interest to date:
>
> 1) Am I correct that the total interest must be declared in year 30?
>
> 2) If so, then for a bond say 32 years old, the taxpayer must amend his
> 30th year return. Right? But what about a 40 year old bond? Does one
> actually have to amend a return from 10 years ago?
>
> Mel
someone will send a 1099-INT showing the interest. If the 1099-INT is
for the year it was cashed in, I would just declare the interest for
that year even though that appears to be technically incorrect. If the
1099-INT is for the year the bond matured and that year is still open
for amendment, I would probably bite the bullet and file an amended return.
If the 1099-INT is for the year the bond matured and that year is NOT
still open for amendment, I don't know what I would do. In this
instance, can the government even legally make you pay taxes on the
interest?
Tempuser
Apr 30, 2022, 3:39:24 PM4/30/22
to
from the bank
are beyond their 30 year maturity they are paper bonds. As such, when
cashed at a bank, it is the bank that will issue the 1099-INT for the
year cashed not for the maturity year.
I not aware of the IRS ever having assessed a late payment penalty or
interest charge against someone who cashed one of these bonds beyond its
maturity year and reported the income in the year that matched the
1099-INT received from the bank.
--
Alan
On 4/29/22 1:58 PM, BignTall wrote:
> On 4/29/2022 10:49 AM, MZB wrote:
>> A few questions about a savings bond that is over the 30-yr final
>> maturity thresshold. Assuming one has not declared any interest to date:
>>
>> 1) Am I correct that the total interest must be declared in year 30?
>>
>> 2) If so, then for a bond say 32 years old, the taxpayer must amend
>> his 30th year return. Right? But what about a 40 year old bond? Does
>> one actually have to amend a return from 10 years ago?
>>
>> Mel
>> That is a really good question. After the savings bond is cashed in,
> someone will send a 1099-INT showing the interest. If the 1099-INT is
> for the year it was cashed in, I would just declare the interest for
> that year even though that appears to be technically incorrect. If the
> 1099-INT is for the year the bond matured and that year is still open
> for amendment, I would probably bite the bullet and file an amended return.
>
> If the 1099-INT is for the year the bond matured and that year is NOT
> still open for amendment, I don't know what I would do. In this
> instance, can the government even legally make you pay taxes on the
> interest?
>
Only E and EE bonds have a 30 year maturity. If the bond(s) in question
> On 4/29/2022 10:49 AM, MZB wrote:
>> A few questions about a savings bond that is over the 30-yr final
>> maturity thresshold. Assuming one has not declared any interest to date:
>>
>> 1) Am I correct that the total interest must be declared in year 30?
>>
>> 2) If so, then for a bond say 32 years old, the taxpayer must amend
>> his 30th year return. Right? But what about a 40 year old bond? Does
>> one actually have to amend a return from 10 years ago?
>>
>> Mel
>> That is a really good question. After the savings bond is cashed in,
> someone will send a 1099-INT showing the interest. If the 1099-INT is
> for the year it was cashed in, I would just declare the interest for
> that year even though that appears to be technically incorrect. If the
> 1099-INT is for the year the bond matured and that year is still open
> for amendment, I would probably bite the bullet and file an amended return.
>
> If the 1099-INT is for the year the bond matured and that year is NOT
> still open for amendment, I don't know what I would do. In this
> instance, can the government even legally make you pay taxes on the
> interest?
>
are beyond their 30 year maturity they are paper bonds. As such, when
cashed at a bank, it is the bank that will issue the 1099-INT for the
year cashed not for the maturity year.
I not aware of the IRS ever having assessed a late payment penalty or
interest charge against someone who cashed one of these bonds beyond its
maturity year and reported the income in the year that matched the
1099-INT received from the bank.
--
Alan
MZB
Apr 30, 2022, 9:54:27 PM4/30/22
to
Especially if you foresee a huge drop in income. Wait until THAT year.
Cash it in at a much lower tax bracket.
Mel
paultry
May 1, 2022, 9:34:32 AM5/1/22
to
On 04/30/2022 20:53, MZB wrote:
>
>
> I'm VERY surprised the IRS lets it slide. This means you can
> wait. Especially if you foresee a huge drop in income. Wait
> until THAT year. Cash it in at a much lower tax bracket.
>
>
> Mel
>
If the bond earnings are so great as to need a tax strategy,
>
>
> I'm VERY surprised the IRS lets it slide. This means you can
> wait. Especially if you foresee a huge drop in income. Wait
> until THAT year. Cash it in at a much lower tax bracket.
>
>
> Mel
>
you'd probably want to redeem the now zero interest matured
bonds to get that money working somewhere else.
BignTall
May 1, 2022, 9:49:36 PM5/1/22
to
the year the savings bond is redeemed and NOT the year it matured. If I
found a savings bond that matured 10 years ago, the unreported interest
for tax year 2012 is so far beyond the statute of limitations there
doesn't appear to a way for the IRS to tax it at all.
Rick
May 1, 2022, 9:49:37 PM5/1/22
to
"MZB" wrote in message news:t4g2q4$14t$1...@dont-email.me...
on the accrued interest are due in full. So if you wait until year 32 (or
40), you are now two years (or eight years) delinquent in paying those
taxes. Assuming you cash the bond in year 32 (or year 40), the financial
institution where you cash the bond would issue a 1099-INT which would be
reported to the IRS. If you now report that interest on your tax return for
year 32 (or year 40) as though it were due in the year of filing, it's
anyone's guess if the IRS would catch that or would you bill you for any
late payment on the taxes owed. While amending your return might
technically be the correct thing to do, I think I would just report the
interest in whatever year you cash the bond and let the IRS bill you if they
catch it. Since you will have paid the full amount of the taxes owed (the
bond doesn't earn interest after year 30), what the IRS might bill you for
is the interest and penalty you could owe for under paying in year 30. I
say "might" because it is possible you had enough money withheld in year 30
to cover the extra tax you should have paid that year.
--
>
>A few questions about a savings bond that is over the 30-yr final maturity
>thresshold. Assuming one has not declared any interest to date:
>
>1) Am I correct that the total interest must be declared in year 30?
>
>2) If so, then for a bond say 32 years old, the taxpayer must amend his
>30th year return. Right? But what about a 40 year old bond? Does one
>actually have to amend a return from 10 years ago?
>
>Mel
>
My understanding is that after 30 years, the bond is fully matured and taxes
>A few questions about a savings bond that is over the 30-yr final maturity
>thresshold. Assuming one has not declared any interest to date:
>
>1) Am I correct that the total interest must be declared in year 30?
>
>2) If so, then for a bond say 32 years old, the taxpayer must amend his
>30th year return. Right? But what about a 40 year old bond? Does one
>actually have to amend a return from 10 years ago?
>
>Mel
>
on the accrued interest are due in full. So if you wait until year 32 (or
40), you are now two years (or eight years) delinquent in paying those
taxes. Assuming you cash the bond in year 32 (or year 40), the financial
institution where you cash the bond would issue a 1099-INT which would be
reported to the IRS. If you now report that interest on your tax return for
year 32 (or year 40) as though it were due in the year of filing, it's
anyone's guess if the IRS would catch that or would you bill you for any
late payment on the taxes owed. While amending your return might
technically be the correct thing to do, I think I would just report the
interest in whatever year you cash the bond and let the IRS bill you if they
catch it. Since you will have paid the full amount of the taxes owed (the
bond doesn't earn interest after year 30), what the IRS might bill you for
is the interest and penalty you could owe for under paying in year 30. I
say "might" because it is possible you had enough money withheld in year 30
to cover the extra tax you should have paid that year.
--
Stuart O. Bronstein
May 1, 2022, 11:54:38 PM5/1/22
to
BignTall <psc56...@mailnull.com> wrote:
> I'm more surprised the law doesn't require the interest be taxable
> in the year the savings bond is redeemed and NOT the year it
> matured. If I found a savings bond that matured 10 years ago, the
> unreported interest for tax year 2012 is so far beyond the statute
> of limitations there doesn't appear to a way for the IRS to tax it
> at all.
Unless the IRS thinks you did it on purpose to avoid paying taxes on
> I'm more surprised the law doesn't require the interest be taxable
> in the year the savings bond is redeemed and NOT the year it
> matured. If I found a savings bond that matured 10 years ago, the
> unreported interest for tax year 2012 is so far beyond the statute
> of limitations there doesn't appear to a way for the IRS to tax it
> at all.
that income. In that case it would be fraud, and there is no statute
of limitations on fraud.
--
Stu
http://DownToEarthLawyer.com
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