This topic has discussed taxable and tax-exempt interest, and how to determine taxable interest income from savings accounts, U.S. savings bonds, deferred interest accounts and certificates, insurance proceeds, and Coverdell ESAs.
Interest is reported in the year that it is credited to the taxpayer's account and is available for withdrawal by the taxpayer.
Taxpayers can report interest income from a Series EE or Series I savings bond either each year or when the bond matures or is redeemed; however, savings bond owners must use the same interest reporting method for all Series EE and Series I bonds they redeem.
For Series HH U.S. savings bonds, taxpayers must report the interest in the year it is paid. Interest on other U.S. obligations, such as U.S. Treasury notes and bonds, is fully taxable when received.
Taxpayers may be able to exclude from income all or part of certain U.S. savings bond interest if they paid for qualified higher education expenses the same year the bonds were cashed.
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