I Bonds

By Terry Savage on February 22, 2024 | Chicken Money

Terry, good evening. Have a question about redeeming I Bonds. I redeemed an I Bond in December of 2023 in which I had held for 15 months and reinvested in a 26 week T Bill. After redeeming the I Bond, it was deposited in my checking account. I found my 1099 on the Treasury Direct website. On the 1099 it listed my interest in box 3. No where on the 1099 did it list the penalty amount for the 3 months for redeeming early. I called Treasury Direct and they stated to me that they do not provide the amount of the 3 month penalty. I recently read an article that stated that you could deduct the early withdrawal penalty from your federal taxes. So my first question is, can I deduct the withdrawal penalty from my taxes? And if I can deduct the withdrawal penalty from my taxes, how do I determine the 3 month penalty. Any guidance would be appreciated. Thank you so much for your time.

Terry Says

I asked my contact at Treasury about this, and he reminded me that it’s unlikely you are filing an itemized tax return anyway. But in conclusion, he conceded that they don’t break out the penalty amount! So you’re going to miss out on this deduction! Hope it wasn’t a big one!

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