I BONDS
Purchased $5000 in I bonds in 2021. The current value is $7500. If i cash in $5000 (principal) is there any 2025 1099 tax libility other than proceeds and cost being $5000? My assumption cost basis is FIFO. Understand the less than 5 year penalty could apply.
Terry Says
For sure that penalty would apply — and you are so close to the 5-year moment. So please delay cashing them in (unless the alternative is credit card debt at 25+%!).
When you do cash them in the earnings become Federally taxable at your marginal tax rate.
