BoA don't understand US Savings Bonds

March 1, 2012 4:10 PM

BoA/US savings bond interest problem, need to know how to solve this.

So in January 2011 I cashed a US savings bond at Bank of America that accrued interest, well over $10.00. I waited for my 1099 INT form to come in February, but it never did. So I called BoA asking where it was. The lady who I spoke with was very confused, stated that my account hadn't accrued any interest. I explained I cashed a US Savings Bond and that the bond had accrued interest. She then asked if that was like a CD??? I told her no, and proceeded to explain to her what it was. She said that she then saw what I needed and would mail it out. I asked her if it was a 1099 INT, she told me yes.

So today I get the "1099 INT" which is a letter telling me I didn't accrue any interest on the account. I want file my taxes asap! What do I need to tell Bank of America so then send me the right form? How can get this fixed? I've never run into this before, most other banks have sent me the 1099 INT no problem.

posted by Attackpanda to Work & Money (4 answers total)

The interest didn't actually accrue on your BoA account, but on that bond. BoA is just cashing it for you, in the same way it would cash a check coming from another bank.

When my husband cashed a Savings Bond, I believe they gave him the figure right at that point. It sounds like you know how much interest you got from your bond, too -- just put that down on your taxes. Do you have to submit the INT form for some reason?
posted by Tandem Affinity at 4:38 PM on March 1, 2012

If you know the amount just put it on your tax form. You don't actually submit the 1099-INT to anybody. There is some threshold below which banks are not required to provide a 1099. I think it's 10 or 20 bucks.
posted by COD at 6:17 PM on March 1, 2012

Response by poster: The problem was BoA was convinced the I didn't have any interest. I spent nearly an hour on the phone and I finally talked to a guy who knew what I wanted. He told me the tax department and CS department don't pass info back and forth that often. So when I updated my address last year, the tax department never got it and sent my 1099 to a place I haven't lived in a year. Awesome...

The guy states another one is being sent out but he was able to just tell me the amount. I can file my taxes! Huzzah!
posted by Attackpanda at 8:09 PM on March 1, 2012

US Savings bonds are usually sold at a deep discount to the principal value, the amount paid back at maturity. I believe that this discount is usually ~50%. What that means is that for, say, $1,000 principal value, the investor would have paid $500. Additionally, these bonds don't pay interest periodically over time before maturity (like normal bonds). So at maturity, the investor gets his $1,000 principal value inclusive of the $500 accrued discount as well as the cumulative interest due.

For income tax purposes, the interest income is probably taxed at ordinary income rate whereas the accrued discount (that $500) is probably taxed at capital gain rates -- but on this you would have to check with the IRS tax rules or an accountant.

Here is a link to the government website with detailed information with respect to how these things work.
posted by cool breeze at 1:09 PM on March 2, 2012