• Query about savings bonds beyond final maturity

    From MZB@21:1/5 to All on Fri Apr 29 11:49:24 2022
    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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  • From Bob Sandler@21:1/5 to All on Fri Apr 29 15:40:23 2022
    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
    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

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  • From BignTall@21:1/5 to MZB on Fri Apr 29 16:58:32 2022
    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?

    --
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    << 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. >>
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  • From Tempuser@21:1/5 to BignTall on Sat Apr 30 15:37:42 2022
    from the bank
    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
    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

    --
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    << 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 >>
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  • From MZB@21:1/5 to Tempuser on Sat Apr 30 21:53:54 2022
    On 4/30/2022 3:37 PM, Tempuser wrote:
     from the bank
    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
    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.



    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

    --
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    << nor can it used, for the purpose of avoiding penalties >>
    << that may be imposed upon the taxpayer. >>
    << >>
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  • From paultry@21:1/5 to MZB on Sun May 1 09:29:33 2022
    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,
    you'd probably want to redeem the now zero interest matured
    bonds to get that money working somewhere else.

    --
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    << 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. >>
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  • From Rick@21:1/5 to MZB on Sun May 1 21:49:12 2022
    "MZB" wrote in message news:t4g2q4$14t$1@dont-email.me...

    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
    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.

    --

    --
    << ------------------------------------------------------- >>
    << 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. >>
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  • From BignTall@21:1/5 to MZB on Sun May 1 21:48:39 2022
    On 4/30/2022 8:53 PM, MZB wrote:
    On 4/30/2022 3:37 PM, Tempuser wrote:
      from the bank
    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 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.



    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


    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.

    --
    << ------------------------------------------------------- >>
    << 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. >>
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  • From Stuart O. Bronstein@21:1/5 to BignTall on Sun May 1 23:52:18 2022
    BignTall <psc56.nntp@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
    that income. In that case it would be fraud, and there is no statute
    of limitations on fraud.

    --
    Stu
    http://DownToEarthLawyer.com

    --
    << ------------------------------------------------------- >>
    << 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. >>
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