Ibond 1099 question

[Brook2]

Forgive if this has been answered 100 times but I searched and can't find the answer. I have an ibond (I have not cashed out) but did not get a 1099 this year for the interest.

I thought whenever you buy an ibond, you still have to pay annual interest taxes on it no matter what year you cash it out. Am I wrong? Am I confusing this with zero-coupon CD rules?

 

[friar1610]

The default is that taxes are deferred until you cash in the I-bond. You then pay taxes on the interest for the tax year in which you redeem it. TD does not send you a 1099-I. You have to go to the TD web site and “pull” it.

There are apparently ways to declare and pay taxes on the accrued interest annually (as opposed to the default noted above). But I have never done that so someone who has may want to weigh in.

 

[Sunset]

I decided to pay our I-bond interest instead of holding and claiming all the interest for each bond when I cashed it.

Annoyingly, it's correct Treasury Direct only generates a 1099 for when you cash an I-bond.
But if you want to claim it yearly, you can start at any time, even when you have held the bonds more than 1 year, like us.

I made a spreadsheet where I listed each I-bond and the date purchased. Then I used the treasury calculator with a little trick so it works on electronic bonds.
The trick is: since the calculator is made for paper bonds, it only works up to a $5K value. So when I had a $10K bond, I just doubled the value I got for $5K.

It's important for me to track in the spreadsheet, as next year, the calculator will still show total accumulated interest per bond, and I'll have to subtract what I already claimed for each bond.

If one is smart, a person can look at their account on the first day of the new year, to see the total value of the bonds with accumulated interest for each one. No need to use the calculator.

When deferring you can switch to claim it all yearly anytime without notice. But to then go back to deferring the interest, a person has to fill out for IRS forms.
https://www.treasurydirect.gov/savings-bonds/tax-information-ee-i-bonds/

Now, when I cash in our I-bonds, I have to report per bond to the IRS how much interest I've already paid the tax upon. If I die and my heirs don't know, they will pay too much tax.

 

[Dave J]

I have I-Bonds i bought in 2001 and did not pay taxes each year. About 6 or 7 years ago, I realized how big a hit I would get at 30 years when you have to pay tax on all interest, no matter what. So one year would move my tax rate way high. So I reported all interest to date on my tax return 1 year on me, and the next year on my wife. I have then reported earned interest each year going forward and will until I cash them in at 30 years. Mine have the3% fixed rate, so unless something really strange happens, I will hold them until 2031.
friar1610 and Sunset are correct in their posting so I will not repeat them.

 

[pb4uski]

... I made a spreadsheet where I listed each I-bond and the date purchased. Then I used the treasury calculator with a little trick so it works on electronic bonds. ...

Have you checked the eye bonds site?

https://eyebonds.info/ibonds/home10000.html