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Is accrued interest taxable on HH bonds?

mickmeyer
Level 1

I have a 1099-INT that shows annual interest and accrued interest on HH bonds. Are both amounts taxable this year?

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4 Comments 4
Maxine
Level 4

 

I have a couple of clients with the HH bonds.  The annual interest is on the bonds that pay out the interest annually.   The accrued interest is on bonds that were redeemed.  And yes both are taxable.

dascpa
Level 11

Be careful, depending when the bonds were purchased (on an interest accrued date or other) the purchaser may have paid a premium or received a discount on the purchase.  Therefore the bond interest is not actually earned interest and should be shown as US Government Interest and then subtracted out as Nominee Interest.

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Maxine
Level 4

 

Series H and HH bonds were only sold at face value.  And it is US Government interest.  Taxable to the federal and not the state.

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dascpa
Level 11

I agree, direct sales to the public were at face value.  Brokerage houses that sold them did sell at premiums and discounts based upon purchase date.  I just cashed in a ton of Series E and it took hours in the bank endorsing them the way they wanted.  Total pain in the.....

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