Hi,
I am a US Citizen /Canadian PR. I live in Canada.
During 2023 I redeemed a bunch of Series EE Savings Bonds and of course received a 1099 INT form this year.
I paid taxes on all the accrued interest on the bonds each year that I've owned them in both countries. You can see the accrued interest claimed on both the Canadian filings and US filings. My question is, how do I tell the IRS that this interest is already paid? The treasury direct website says that I was correct in that you can pay the interest as it accures or at redemption but I have to tell the IRS that this interest was paid already. They referred me to IRS Pub 550 and said:
"When you get the 1099-INT at the end, it will show all the interest the bond earned over the years. For instructions on how to tell the IRS that you already reported some or all of that interest in earlier years, go to IRS Publication 550 and look for the section on U.S. Savings Bonds."
However, when i go through this publication I didn't find instructions telling me how to handle it.
Can you help?
Thanks.
US Savings Bond EE Accrued Interest
Moderator: Mark T Serbinski CA CPA
Re: US Savings Bond EE Accrued Interest
Hello Arat,
I've been doing some research on this as my wife (US/Canadian dual-citizen living in Canada) redeemed US bonds in 2024 and received a 1099-INT for the interest.
I've read that interest on Savings bonds is not taxable in Canada per US/Canada tax treaty (Article XI, Paragraph 3) and therefore wouldn't be reported on the US side (should obviously be reported on the US side and can't claim any FTC for it).
I'm still trying to confirm whether this is accurate. Wondering if you have information that says otherwise or if you've learned anything new on your end.
thank you
I've been doing some research on this as my wife (US/Canadian dual-citizen living in Canada) redeemed US bonds in 2024 and received a 1099-INT for the interest.
I've read that interest on Savings bonds is not taxable in Canada per US/Canada tax treaty (Article XI, Paragraph 3) and therefore wouldn't be reported on the US side (should obviously be reported on the US side and can't claim any FTC for it).
I'm still trying to confirm whether this is accurate. Wondering if you have information that says otherwise or if you've learned anything new on your end.
thank you
Re: US Savings Bond EE Accrued Interest
correction: "...and therefore wouldn't be reported on the CANADIAN side..."
Re: US Savings Bond EE Accrued Interest
Update: getting conflicting information about US savings bonds being taxable or not in Canada so I reached out to the CRA. Tier 3 agent did some search and went through US/Canada Tax Treaty Section VI and couldn't give a definitive answer. They will research further and get back to me next week. Will update here when I hear back.
Re: US Savings Bond EE Accrued Interest
correction: "...Treaty Article XI..."
-
horroraround
- Posts: 3
- Joined: Mon Mar 04, 2024 10:01 pm
Re: US Savings Bond EE Accrued Interest
arat wrote:
> Hi,
>
> I am a US Citizen /Canadian PR. I live in Canada.
>
> During 2023 I redeemed a bunch of Series EE Savings Bonds and of course
> received a 1099 INT form this year.
>
> I paid taxes on all the accrued interest on the bonds each year that I've
> owned them in both countries. You can see the accrued interest claimed on
> both the Canadian filings and US filings. My question is, how do I tell
> the IRS that this interest is already paid? The treasury direct website
> says that I was correct in that you can pay the interest as it accures or
> at redemption but I have to tell the IRS that this interest was paid
> already. They referred me to IRS Pub 550 and said:
>
> "When you get the 1099-INT at the end, it will show all the interest
> the bond earned over the years. For instructions on how to tell the IRS
> that you already reported some or all of that interest in earlier years, go
> to IRS Publication 550 and look for the section on U.S. Savings
> Bonds."
>
> However, when i go through this publication I didn't find instructions
> telling me how to handle it.
>
> Can you help?
>
> Thanks.
You're right, Publication 550 discusses the two ways to report savings bond interest (accrual and cash), but it doesn't explicitly lay out the form instructions for showing you've already paid tax on accrued interest. It's a common point of confusion. The key is that you don't report the full amount shown on the 1099-INT as taxable interest income. Instead, you calculate the difference between the total interest shown on the 1099-INT and the interest you've already reported in previous years. This difference is the amount you report on Schedule B (Form 1040), Interest and Ordinary Dividends.
> Hi,
>
> I am a US Citizen /Canadian PR. I live in Canada.
>
> During 2023 I redeemed a bunch of Series EE Savings Bonds and of course
> received a 1099 INT form this year.
>
> I paid taxes on all the accrued interest on the bonds each year that I've
> owned them in both countries. You can see the accrued interest claimed on
> both the Canadian filings and US filings. My question is, how do I tell
> the IRS that this interest is already paid? The treasury direct website
> says that I was correct in that you can pay the interest as it accures or
> at redemption but I have to tell the IRS that this interest was paid
> already. They referred me to IRS Pub 550 and said:
>
> "When you get the 1099-INT at the end, it will show all the interest
> the bond earned over the years. For instructions on how to tell the IRS
> that you already reported some or all of that interest in earlier years, go
> to IRS Publication 550 and look for the section on U.S. Savings
> Bonds."
>
> However, when i go through this publication I didn't find instructions
> telling me how to handle it.
>
> Can you help?
>
> Thanks.
You're right, Publication 550 discusses the two ways to report savings bond interest (accrual and cash), but it doesn't explicitly lay out the form instructions for showing you've already paid tax on accrued interest. It's a common point of confusion. The key is that you don't report the full amount shown on the 1099-INT as taxable interest income. Instead, you calculate the difference between the total interest shown on the 1099-INT and the interest you've already reported in previous years. This difference is the amount you report on Schedule B (Form 1040), Interest and Ordinary Dividends.
-
juliaadams43463
- Posts: 2
- Joined: Mon Oct 28, 2024 10:43 am
Re: US Savings Bond EE Accrued Interest
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