IRS Penalty for not redeeming a matured I Bond
Is there an IRS penalty for not redeeming a matured I Bond – deferring redemption to a later year for tax purposes?
Terry Says
I-bonds were first issued in 1998. They do not mature for 30 years. So you don’t have a problem yet!!
Are you thinking of Series EE bonds, or original Series E bonds? Many of them have already matured.
You are “supposed” to cash them in the year they mature. But many people divide the process into two or even three years, to avoid the IRMAA Medicare income adjustment, as well as to avoid moving into a higher tax bracket.
But I haven’t yet heard a story of the IRS tracking down those who do wait! Since you will be issued a 1099 in the year in which you cash in the bonds, that’s they year you must report the income.
When the time comes, here’s how to do it!
https://treasurydirect.gov/savings-bonds/cashing-a-bond/
