We no longer offer Series HH savings bonds, but some we issued in the past havent matured and are still paying interest.
On this page:
- Is HH bond interest taxable?
- When must I report the interest on my federal income tax return?
- Who owes the tax?
- What is deferred interest?
- How do I know if my HH bond has deferred interest?
- How long may I continue to defer the interest?
- For more information
Is HH bond interest taxable?
The interest that your HH bonds earn every six months is subject to federal income tax, but not to state or local income tax.
When must I report the interest on my federal income tax return?
The regular interest that your HH bonds earn every six months must be reported on your federal income tax return for the year in which the interest is earned. By January 31 of each year, we send the bond owner an IRS Form 1099-INT form showing the interest earned in the previous year.
Who owes the tax?
|Situation||Who owes the tax|
|You are the only owner of the bond||You|
|You used your bonds to acquire an HH bond in an exchange, and the HH bonds that were issued are in your name with a co-owner.||You|
|In acquiring HH bonds in an exchange, you submitted bonds that you and another person bought together, each providing part of the money to buy the bonds, and you are both named as co-owners on the HH bonds issued in the exchange.||You and the other person must each report the interest in proportion to how much you each paid for the bonds exchanged for the HH bonds. We send only one IRS Form 1099-INT. We send it to the person whose name is first in the bonds registration.|
|You and your spouse live in a community property state and own the HH bond that is community property and you file separate tax returns||You and your spouse each report 1/2 of the interest. We send only one IRS Form 1099-INT. We send it to the person whose name is first in the bonds registration.|
What is deferred interest?
Certain HH bonds weren’t available for cash only. To buy these HH bonds, the buyer had to trade in another security he or she had bought earlier. The earlier security could be a Series EE or Series E saving bond, or a savings note.
In making the exchange, the buyer used interest earned by the original security to help pay for the HH bond. Concerning taxes on the original bond’s interest, the buyer had a choice: pay then or pay later. In cases where the buyer chose to wait, interest on the original security is known as deferred interest. The amount is shown on the front of the HH bond and is identified as “deferred interest.”
If you owe tax on deferred interest, you can wait to pay until you cash the bond or the bond matures, whichever comes first. After you cash the bond or it matures, we send you an IRS Form 1099-INT showing the deferred interest and we report the amount to the IRS.
Deferred interest is not money we owe you in addition to the face value of an HH bond. Rather, deferred interest is part of the face value of the HH bond.
(If an older bond was exchanged for more than one HH bond, deferred interest was divided proportionately among the HH bonds.)
How do I know if my HH bond has deferred interest?
If your bond has deferred interest, the amount is shown on the front of the bond and is identified as “deferred interest.”
How long may I continue to defer the interest?
You dont have to report deferred interest on your federal income tax return until you are filing your return for the year in which the first of these events occurs:
- You cash the HH bond.
- The HH bond stops earning interest (this happens 20 years after issue).
- The HH bond is reissued to show a change in ownership that is a taxable event. Reissuing or Replacing a Savings Bond.
We show the deferred interest on an IRS Form 1099-INT for that year.
For more information
See IRS Publication 550, Investment Income and Expenses
(Note: Before Series HH savings bonds, we issued Series H savings bonds. All H bonds have matured.)