How Do You Report Interest Income From Redeeming Series EE Savings Bonds?


Quick Answer

Interest income from the redemption of a Series EE savings bond is reported on the bondholder's federal income tax return on the same line with other interest income, according to the U.S. Treasury. The bondholder is notified of interest income earned on the IRS form 1099-INT.

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Full Answer

Series EE bonds held electronically in a TreasuryDirect account are automatically redeemed when they mature, states the U.S. Treasury. The interest earned is reported to the IRS, and the form 1099-INT is made available through the account. When the bond is redeemed at a financial institution, the form 1099-INT is sent directly from the institution through the mail. Depending on the institution, the form may be sent shortly after the transaction or within the first two months after the year in which the bond is redeemed.

While most bondholders defer reporting interest income until maturity or redemption, reporting every year is also an option. While interest is not actually received every year, parents sometimes choose this option for bonds held in a child's name to reduce the tax owed in early years. Once the bond is redeemed or matured, the U.S. Treasury recommends consulting IRS publication 550 for instructions on how to tell the IRS that interest income was reported in earlier years.

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