A person who holds a U.S. savings bond does not sell it. Savings bonds are redeemed. If the savings bond you received as a young child has finally reached maturity and you are ready to redeem it, before spending the money you receive for it, keep in mind that you must pay tax on the interest earned. Report the interest income to the IRS on your federal income tax return for the year in which the bond is redeemed.
Step 1
Look at Form 1099-INT. The financial institution at which you redeem the bond must issue the form to you for the appropriate tax year. You should receive the form at the start of the next year. If you redeem the bond through the Treasury Direct website, you will be able to access the form online. The amount of interest you earned on the bond will be in Box 3 of the form. This amount is the final value of the bond minus the amount it originally cost.
Step 2
Record the interest amount on the appropriate line on Form 1040, 1040-A or Form 1040-EZ. On 1040 and 1040-A, report the amount on line 8a. On 1040-EZ, report it on line 2. You must use either 1040 or 1040-A if the amount is above $1,500.
Step 3
Complete Schedule B if you earned more than $1,500 in interest from all sources or if you already have paid tax on some of the interest.
