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Amended Return

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Amended Return

Amended return Index Symbols $10,000, cash payments over, Introduction A Assistance (see Tax help) C Cash transactions over $10,000, Introduction F Form, Who Must File Form 8300? 8300, Who Must File Form 8300? Free tax services, How To Get Tax Help H Help (see Tax help) M More information (see Tax help) P Publications (see Tax help) R Reporting cash payments over $10,000, Introduction T Tax help, How To Get Tax Help Taxpayer Advocate, Taxpayer Advocate Service. Amended return TTY/TDD information, How To Get Tax Help Prev  Up     Home   More Online Publications
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Selective Service System (SSS)

The Selective Service System is charged with providing the Department of Defense trained and untrained personnel in the event of a national emergency. Almost all male citizens and immigrants between the agees of 18-26 must register with the Selective Service. The Selective Service also provides alternative service options for concientious objectors.

Contact the Agency or Department

Website: Selective Service System (SSS) Who Must Register with the Selective Service? What Happens in a Draft?

E-mail:

Address: P.O. Box 94638
Palatine, IL 60094-4638

Phone Number: (847) 688-6888

Toll-free: (888) 655-1825

TTY: (847) 688-2567

The Amended Return

Amended return 1. Amended return   Investment Income Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: General InformationSSN for joint account. Amended return Custodian account for your child. Amended return Penalty for failure to supply SSN. Amended return Certification. Amended return Underreported interest and dividends. Amended return How to stop backup withholding due to underreporting. Amended return How to stop backup withholding due to an incorrect identification number. Amended return Reporting backup withholding. Amended return Nonresident aliens. Amended return Penalties. Amended return Savings account with parent as trustee. Amended return Interest IncomeInterest not reported on Form 1099-INT. Amended return Nominees. Amended return Incorrect amount. Amended return Information reporting requirement. Amended return Taxable Interest — General Below-Market Loans U. Amended return S. Amended return Savings Bonds U. Amended return S. Amended return Treasury Bills, Notes, and Bonds Bonds Sold Between Interest Dates Insurance State or Local Government Obligations Discount on Debt InstrumentsOriginal Issue Discount (OID) Market Discount Bonds Discount on Short-Term Obligations Election To Report All Interest as OID When To Report Interest IncomeConstructive receipt. Amended return How To Report Interest IncomeSchedule B (Form 1040A or 1040). Amended return Worksheet for savings bonds distributed from a retirement or profit-sharing plan. Amended return File Form 1099-INT with the IRS. Amended return Dividends and Other DistributionsDividends not reported on Form 1099-DIV. Amended return Nominees. Amended return Ordinary Dividends Capital Gain Distributions Nondividend Distributions Liquidating Distributions Distributions of Stock and Stock Rights Other Distributions How To Report Dividend IncomeElection. Amended return Independent contractor. Amended return Investment interest deducted. Amended return Exception 1. Amended return Exception 2. Amended return Undistributed capital gains. Amended return File Form 1099-DIV with the IRS. Amended return Stripped Preferred Stock REMICs, FASITs, and Other CDOsREMICs Collateralized Debt Obligations (CDOs) FASITs S CorporationsLimit on losses and deductions. Amended return Passive activity losses. Amended return Form 8582. Amended return Investment ClubsInvestments in name of member. Amended return Tax Treatment of the Club Topics - This chapter discusses: Interest Income , Discount on Debt Instruments , When To Report Interest Income , How To Report Interest Income , Dividends and Other Distributions , How To Report Dividend Income , Stripped Preferred Stock , Real estate mortgage investment conduits (REMICs), financial asset securitization investment trusts (FASITs), and other collateralized debt obligations (CDOs) , S Corporations , and Investment Clubs . Amended return Useful Items - You may want to see: Publication 525 Taxable and Nontaxable Income 537 Installment Sales 590 Individual Retirement Arrangements (IRAs) 925 Passive Activity and At-Risk Rules 1212 Guide to Original Issue Discount (OID) Instruments Form (and Instructions) Schedule B (Form 1040A or 1040) Interest and Ordinary Dividends Schedule D (Form 1040) Capital Gains and Losses 1040 U. Amended return S. Amended return Individual Income Tax Return 1040A U. Amended return S. Amended return Individual Income Tax Return 1040EZ Income Tax Return for Single and Joint Filers With No Dependents 1099 General Instructions for Certain Information Returns 2439 Notice to Shareholder of Undistributed Long-Term Capital Gains 3115 Application for Change in Accounting Method 6251 Alternative Minimum Tax — Individuals 8582 Passive Activity Loss Limitations 8615 Tax for Certain Children Who Have Unearned Income 8814 Parents' Election To Report Child's Interest and Dividends 8815 Exclusion of Interest From Series EE and I U. Amended return S. Amended return Savings Bonds Issued After 1989 8818 Optional Form To Record Redemption of Series EE and I U. Amended return S. Amended return Savings Bonds Issued After 1989 8824 Like-Kind Exchanges 8949 Sales and Other Dispositions of Capital Assets 8960 Net Investment Income Tax—Individuals, Estates, and Trusts See chapter 5, How To Get Tax Help , for information about getting these publications and forms. Amended return General Information A few items of general interest are covered here. Amended return Recordkeeping. Amended return You should keep a list showing sources and investment income amounts you receive during the year. Amended return Also keep the forms you receive showing your investment income (Forms 1099-INT, Interest Income, and 1099-DIV, Dividends and Distributions, for example) as an important part of your records. Amended return Net investment income tax (NIIT). Amended return   Beginning in 2013, you may be subject to the NIIT. Amended return The NIIT is a 3. Amended return 8% tax on the lesser of your net investment income or the amount of your modified adjusted gross income (MAGI) that is over a threshold amount based on your filing status. Amended return    Filing Status Threshold Amount Married filing jointly $250,000 Married filing separately $125,000 Single $200,000 Head of household (with qualifying person) $200,000 Qualifying Widow(er) with dependent child $250,000    For more information, see Form 8960 and Instructions for Form 8960. Amended return Tax on unearned income of certain children. Amended return   Part of a child's 2013 unearned income may be taxed at the parent's tax rate. Amended return This may happen if all of the following are true. Amended return The child had more than $2,000 of unearned income. Amended return The child is required to file a tax return. Amended return The child was: Under age 18 at the end of 2013, Age 18 at the end of 2013 and did not have earned income that was more than half of the child's support, or A full-time student over age 18 and under age 24 at the end of 2013 and did not have earned income that was more than half of the child's support. Amended return At least one of the child's parents was alive at the end of 2013. Amended return The child does not file a joint return for 2013. Amended return A child born on January 1, 1996, is considered to be age 18 at the end of 2013; a child born on January 1, 1995, is considered to be age 19 at the end of 2013; a child born on January 1, 1990, is considered to be age 24 at the end of 2013. Amended return   If all of these statements are true, Form 8615 must be completed and attached to the child's tax return. Amended return If any of these statements is not true, Form 8615 is not required and the child's income is taxed at his or her own tax rate. Amended return    However, the parent can choose to include the child's interest and dividends on the parent's return if certain requirements are met. Amended return Use Form 8814 for this purpose. Amended return   For more information about the tax on unearned income of children and the parents' election, see Publication 929, Tax Rules for Children and Dependents. Amended return Beneficiary of an estate or trust. Amended return   Interest, dividends, and other investment income you receive as a beneficiary of an estate or trust is generally taxable income. Amended return You should receive a Schedule K-1 (Form 1041), Beneficiary's Share of Income, Deductions, Credits, etc. Amended return , from the fiduciary. Amended return Your copy of Schedule K-1 (Form 1041) and its instructions will tell you where to report the income on your Form 1040. Amended return Social security number (SSN). Amended return   You must give your name and SSN or individual tax identification number (ITIN) to any person required by federal tax law to make a return, statement, or other document that relates to you. Amended return This includes payers of interest and dividends. Amended return If you do not give your SSN or ITIN to the payer of interest, you may have to pay a penalty. Amended return SSN for joint account. Amended return   If the funds in a joint account belong to one person, list that person's name first on the account and give that person's SSN to the payer. Amended return (For information on who owns the funds in a joint account, see Joint accounts , later. Amended return ) If the joint account contains combined funds, give the SSN of the person whose name is listed first on the account. Amended return This is because only one name and SSN can be shown on Form 1099. Amended return   These rules apply both to joint ownership by a married couple and to joint ownership by other individuals. Amended return For example, if you open a joint savings account with your child using funds belonging to the child, list the child's name first on the account and give the child's SSN. Amended return Custodian account for your child. Amended return   If your child is the actual owner of an account that is recorded in your name as custodian for the child, give the child's SSN to the payer. Amended return For example, you must give your child's SSN to the payer of dividends on stock owned by your child, even though the dividends are paid to you as custodian. Amended return Penalty for failure to supply SSN. Amended return   You will be subject to a penalty if, when required, you fail to: Include your SSN on any return, statement, or other document, Give your SSN to another person who must include it on any return, statement, or other document, or Include the SSN of another person on any return, statement, or other document. Amended return The penalty is $50 for each failure up to a maximum penalty of $100,000 for any calendar year. Amended return   You will not be subject to this penalty if you can show that your failure to provide the SSN was due to reasonable cause and not to willful neglect. Amended return   If you fail to supply an SSN, you may also be subject to backup withholding. Amended return Backup withholding. Amended return   Your investment income is generally not subject to regular withholding. Amended return However, it may be subject to backup withholding to ensure that income tax is collected on the income. Amended return Under backup withholding, the bank, broker, or other payer of interest, original issue discount (OID), dividends, cash patronage dividends, or royalties must withhold, as income tax, on the amount you are paid, applying the appropriate withholding rate. Amended return   Backup withholding applies if: You do not give the payer your identification number (either a social security number or an employer identification number) in the required manner, The IRS notifies the payer that you gave an incorrect identification number, The IRS notifies the payer that you are subject to backup withholding on interest or dividends because you have underreported interest or dividends on your income tax return, or You are required, but fail, to certify that you are not subject to backup withholding for the reason described in (3). Amended return Certification. Amended return   For new accounts paying interest or dividends, you must certify under penalties of perjury that your SSN is correct and that you are not subject to backup withholding. Amended return Your payer will give you a Form W-9, Request for Taxpayer Identification Number and Certification, or similar form, to make this certification. Amended return If you fail to make this certification, backup withholding may begin immediately on your new account or investment. Amended return Underreported interest and dividends. Amended return   You will be considered to have underreported your interest and dividends if the IRS has determined for a tax year that: You failed to include any part of a reportable interest or dividend payment required to be shown on your return, or You were required to file a return and to include a reportable interest or dividend payment on that return, but you failed to file the return. Amended return How to stop backup withholding due to underreporting. Amended return   If you have been notified that you underreported interest or dividends, you can request a determination from the IRS to prevent backup withholding from starting or to stop backup withholding once it has begun. Amended return You must show that at least one of the following situations applies. Amended return No underreporting occurred. Amended return You have a bona fide dispute with the IRS about whether underreporting occurred. Amended return Backup withholding will cause or is causing an undue hardship, and it is unlikely that you will underreport interest and dividends in the future. Amended return You have corrected the underreporting by filing a return if you did not previously file one and by paying all taxes, penalties, and interest due for any underreported interest or dividend payments. Amended return   If the IRS determines that backup withholding should stop, it will provide you with a certification and will notify the payers who were sent notices earlier. Amended return How to stop backup withholding due to an incorrect identification number. Amended return   If you have been notified by a payer that you are subject to backup withholding because you have provided an incorrect SSN or employer identification number, you can stop it by following the instructions the payer gives you. Amended return Reporting backup withholding. Amended return   If backup withholding is deducted from your interest or dividend income or other reportable payment, the bank or other business must give you an information return for the year (for example, a Form 1099-INT) indicating the amount withheld. Amended return The information return will show any backup withholding as “Federal income tax withheld. Amended return ” Nonresident aliens. Amended return    Generally, payments made to nonresident aliens are not subject to backup withholding. Amended return You can use Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding, to certify exempt status. Amended return However, this does not exempt you from the 30% (or lower treaty) withholding rate that may apply to your investment income. Amended return For information on the 30% rate, see Publication 519, U. Amended return S. Amended return Tax Guide for Aliens. Amended return Penalties. Amended return   There are civil and criminal penalties for giving false information to avoid backup withholding. Amended return The civil penalty is $500. Amended return The criminal penalty, upon conviction, is a fine of up to $1,000, or imprisonment of up to 1 year, or both. Amended return Where to report investment income. Amended return   Table 1-1 gives an overview of the forms and schedules to use to report some common types of investment income. Amended return But see the rest of this publication for detailed information about reporting investment income. Amended return Joint accounts. Amended return   If two or more persons hold property (such as a savings account, bond, or stock) as joint tenants, tenants by the entirety, or tenants in common, each person's share of any interest or dividends from the property is determined by local law. Amended return Community property states. Amended return   If you are married and receive a distribution that is community income, one-half of the distribution is generally considered to be received by each spouse. Amended return If you file separate returns, you must each report one-half of any taxable distribution. Amended return See Publication 555, Community Property, for more information on community income. Amended return   If the distribution is not considered community property and you and your spouse file separate returns, each of you must report your separate taxable distributions. Amended return Example. Amended return You and your spouse have a joint money market account. Amended return Under state law, half the income from the account belongs to you, and half belongs to your spouse. Amended return If you file separate returns, you each report half the income. Amended return Income from property given to a child. Amended return   Property you give as a parent to your child under the Model Gifts of Securities to Minors Act, the Uniform Gifts to Minors Act, or any similar law becomes the child's property. Amended return   Income from the property is taxable to the child, except that any part used to satisfy a legal obligation to support the child is taxable to the parent or guardian having that legal obligation. Amended return Savings account with parent as trustee. Amended return   Interest income from a savings account opened for a minor child, but placed in the name and subject to the order of the parents as trustees, is taxable to the child if, under the law of the state in which the child resides, both of the following are true. Amended return The savings account legally belongs to the child. Amended return The parents are not legally permitted to use any of the funds to support the child. Amended return Table 1-1. Amended return Where To Report Common Types of Investment Income (For detailed information about reporting investment income, see the rest of this publication, especially How To Report Interest Income and How To Report Dividend Income in chapter 1. Amended return ) Type of Income If you file Form 1040, report on . Amended return . Amended return . Amended return If you can file Form 1040A, report on . Amended return . Amended return . Amended return If you can file Form 1040EZ, report on . Amended return . Amended return . Amended return Tax-exempt interest (Form 1099-INT, box 8) Line 8b Line 8b Space to the left of line 2 (enter “TEI” and the amount) Taxable interest that totals $1,500 or less Line 8a (You may need to file Schedule B as well. Amended return ) Line 8a (You may need to file Schedule B as well. Amended return ) Line 2 Taxable interest that totals more than $1,500 Line 8a; also use Schedule B, line 1 Line 8a; also use Schedule B, line 1   Savings bond interest you will exclude because of higher education expenses Schedule B; also use Form 8815 Schedule B; also use Form 8815   Ordinary dividends that total $1,500 or less Line 9a (You may need to file Schedule B as well. Amended return ) Line 9a (You may need to file Schedule B as well. Amended return )   Ordinary dividends that total more than $1,500 Line 9a; also use Schedule B, line 5 Line 9a; also use Schedule B, line 5   Qualified dividends (if you do not have to file Schedule D) Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 2 Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 2   Qualified dividends (if you have to file Schedule D) Line 9b; also use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet, line 2 You cannot use Form 1040A    You cannot use Form 1040EZ Capital gain distributions (if you do not have to file Schedule D) Line 13; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 3 Line 10; also use the Qualified Dividends and Capital Gain Tax Worksheet, line 3   Capital gain distributions (if you have to file Schedule D) Schedule D, line 13; also use the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet     Section 1250, 1202, or collectibles gain (Form 1099-DIV, box 2b, 2c, or 2d) Form 8949 and Schedule D     Nondividend distributions (Form 1099-DIV, box 3) Generally not reported*     Undistributed capital gains (Form 2439, boxes 1a - 1d) Schedule D     Gain or loss from sales of stocks or bonds Line 13; also use Form 8949, Schedule D, and the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet You cannot use Form 1040A   Gain or loss from exchanges of like-kind investment property Line 13; also use Schedule D, Form 8824, and the Qualified Dividends and Capital Gain Tax Worksheet or the Schedule D Tax Worksheet     *Report any amounts in excess of your basis in your mutual fund shares on Form 8949. Amended return Use Part II if you held the shares more than 1 year. Amended return Use Part I if you held your mutual fund shares 1 year or less. Amended return For details on Form 8949, see Reporting Capital Gains and Losses in chapter 4, and the Instructions for Form 8949. Amended return Accuracy-related penalty. Amended return   An accuracy-related penalty of 20% can be charged for underpayments of tax due to negligence or disregard of rules or regulations or substantial understatement of tax. Amended return For information on the penalty and any interest that applies, see Penalties in chapter 2. Amended return Interest Income This section discusses the tax treatment of different types of interest income. Amended return In general, any interest that you receive or that is credited to your account and can be withdrawn is taxable income. Amended return (It does not have to be entered in your passbook. Amended return ) Exceptions to this rule are discussed later. Amended return Form 1099-INT. Amended return   Interest income is generally reported to you on Form 1099-INT, or a similar statement, by banks, savings and loans, and other payers of interest. Amended return This form shows you the interest you received during the year. Amended return Keep this form for your records. Amended return You do not have to attach it to your tax return. Amended return   Report on your tax return the total interest income you receive for the tax year. Amended return Interest not reported on Form 1099-INT. Amended return   Even if you do not receive Form 1099-INT, you must still report all of your interest income. Amended return For example, you may receive distributive shares of interest from partnerships or S corporations. Amended return This interest is reported to you on Schedule K-1 (Form 1065), Partner's Share of Income, Deductions, Credits, etc. Amended return , and Schedule K-1 (Form 1120S), Shareholder's Share of Income, Deductions, Credits, etc. Amended return Nominees. Amended return   Generally, if someone receives interest as a nominee for you, that person must give you a Form 1099-INT showing the interest received on your behalf. Amended return   If you receive a Form 1099-INT that includes amounts belonging to another person, see the discussion on Nominee distributions , later, under How To Report Interest Income. Amended return Incorrect amount. Amended return   If you receive a Form 1099-INT that shows an incorrect amount (or other incorrect information), you should ask the issuer for a corrected form. Amended return The new Form 1099-INT you receive will be marked “Corrected. Amended return ” Form 1099-OID. Amended return   Reportable interest income also may be shown on Form 1099-OID, Original Issue Discount. Amended return For more information about amounts shown on this form, see Original Issue Discount (OID) , later in this chapter. Amended return Exempt-interest dividends. Amended return   Exempt-interest dividends you receive from a mutual fund or other regulated investment company, including those received from a qualified fund of funds in any tax year beginning after December 22, 2010, are not included in your taxable income. Amended return (However, see Information reporting requirement , next. Amended return ) Exempt-interest dividends should be shown in box 10 of Form 1099-DIV. Amended return You do not reduce your basis for distributions that are exempt-interest dividends. Amended return Information reporting requirement. Amended return   Although exempt-interest dividends are not taxable, you must show them on your tax return if you have to file. Amended return This is an information reporting requirement and does not change the exempt-interest dividends into taxable income. Amended return See How To Report Interest Income , later. Amended return Note. Amended return Exempt-interest dividends paid from specified private activity bonds may be subject to the alternative minimum tax. Amended return The exempt-interest dividends subject to the alternative minimum tax are shown in box 11 of Form 1099-DIV. Amended return See Form 6251 and its instructions for more information about this tax. Amended return Private activity bonds are discussed later under State or Local Government Obligations. Amended return Interest on VA dividends. Amended return   Interest on insurance dividends left on deposit with the Department of Veterans Affairs (VA) is not taxable. Amended return This includes interest paid on dividends on converted United States Government Life Insurance policies and on National Service Life Insurance policies. Amended return Individual retirement arrangements (IRAs). Amended return   Interest on a Roth IRA generally is not taxable. Amended return Interest on a traditional IRA is tax deferred. Amended return You generally do not include it in your income until you make withdrawals from the IRA. Amended return See Publication 590 for more information. Amended return Taxable Interest — General Taxable interest includes interest you receive from bank accounts, loans you make to others, and other sources. Amended return The following are some sources of taxable interest. Amended return Dividends that are actually interest. Amended return   Certain distributions commonly called dividends are actually interest. Amended return You must report as interest so-called “dividends” on deposits or on share accounts in: Cooperative banks, Credit unions, Domestic building and loan associations, Domestic savings and loan associations, Federal savings and loan associations, and Mutual savings banks. Amended return  The “dividends” will be shown as interest income on Form 1099-INT. Amended return Money market funds. Amended return   Money market funds are offered by nonbank financial institutions such as mutual funds and stock brokerage houses, and pay dividends. Amended return Generally, amounts you receive from money market funds should be reported as dividends, not as interest. Amended return Certificates of deposit and other deferred interest accounts. Amended return   If you open any of these accounts, interest may be paid at fixed intervals of 1 year or less during the term of the account. Amended return You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. Amended return The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. Amended return If interest is deferred for more than 1 year, see Original Issue Discount (OID) , later. Amended return Interest subject to penalty for early withdrawal. Amended return   If you withdraw funds from a deferred interest account before maturity, you may have to pay a penalty. Amended return You must report the total amount of interest paid or credited to your account during the year, without subtracting the penalty. Amended return See Penalty on early withdrawal of savings under How To Report Interest Income, later, for more information on how to report the interest and deduct the penalty. Amended return Money borrowed to invest in certificate of deposit. Amended return   The interest you pay on money borrowed from a bank or savings institution to meet the minimum deposit required for a certificate of deposit from the institution and the interest you earn on the certificate are two separate items. Amended return You must report the total interest you earn on the certificate in your income. Amended return If you itemize deductions, you can deduct the interest you pay as investment interest, up to the amount of your net investment income. Amended return See Interest Expenses in chapter 3. Amended return Example. Amended return You deposited $5,000 with a bank and borrowed $5,000 from the bank to make up the $10,000 minimum deposit required to buy a 6-month certificate of deposit. Amended return The certificate earned $575 at maturity in 2013, but you received only $265, which represented the $575 you earned minus $310 interest charged on your $5,000 loan. Amended return The bank gives you a Form 1099-INT for 2013 showing the $575 interest you earned. Amended return The bank also gives you a statement showing that you paid $310 interest for 2013. Amended return You must include the $575 in your income. Amended return If you itemize your deductions on Schedule A (Form 1040), Itemized Deductions, you can deduct $310, subject to the net investment income limit. Amended return Gift for opening account. Amended return   If you receive noncash gifts or services for making deposits or for opening an account in a savings institution, you may have to report the value as interest. Amended return   For deposits of less than $5,000, gifts or services valued at more than $10 must be reported as interest. Amended return For deposits of $5,000 or more, gifts or services valued at more than $20 must be reported as interest. Amended return The value is determined by the cost to the financial institution. Amended return Example. Amended return You open a savings account at your local bank and deposit $800. Amended return The account earns $20 interest. Amended return You also receive a $15 calculator. Amended return If no other interest is credited to your account during the year, the Form 1099-INT you receive will show $35 interest for the year. Amended return You must report $35 interest income on your tax return. Amended return Interest on insurance dividends. Amended return   Interest on insurance dividends left on deposit with an insurance company that can be withdrawn annually is taxable to you in the year it is credited to your account. Amended return However, if you can withdraw it only on the anniversary date of the policy (or other specified date), the interest is taxable in the year that date occurs. Amended return Prepaid insurance premiums. Amended return   Any increase in the value of prepaid insurance premiums, advance premiums, or premium deposit funds is interest if it is applied to the payment of premiums due on insurance policies or made available for you to withdraw. Amended return U. Amended return S. Amended return obligations. Amended return   Interest on U. Amended return S. Amended return obligations, such as U. Amended return S. Amended return Treasury bills, notes, and bonds, issued by any agency or instrumentality of the United States is taxable for federal income tax purposes. Amended return Interest on tax refunds. Amended return   Interest you receive on tax refunds is taxable income. Amended return Interest on condemnation award. Amended return   If the condemning authority pays you interest to compensate you for a delay in payment of an award, the interest is taxable. Amended return Installment sale payments. Amended return   If a contract for the sale or exchange of property provides for deferred payments, it also usually provides for interest payable with the deferred payments. Amended return That interest is taxable when you receive it. Amended return If little or no interest is provided for in a deferred payment contract, part of each payment may be treated as interest. Amended return See Unstated Interest and Original Issue Discount (OID) in Publication 537. Amended return Interest on annuity contract. Amended return   Accumulated interest on an annuity contract you sell before its maturity date is taxable. Amended return Usurious interest. Amended return   Usurious interest is interest charged at an illegal rate. Amended return This is taxable as interest unless state law automatically changes it to a payment on the principal. Amended return Interest income on frozen deposits. Amended return   Exclude from your gross income interest on frozen deposits. Amended return A deposit is frozen if, at the end of the year, you cannot withdraw any part of the deposit because: The financial institution is bankrupt or insolvent, or The state in which the institution is located has placed limits on withdrawals because other financial institutions in the state are bankrupt or insolvent. Amended return   The amount of interest you must exclude is the interest that was credited on the frozen deposits minus the sum of: The net amount you withdrew from these deposits during the year, and The amount you could have withdrawn as of the end of the year (not reduced by any penalty for premature withdrawals of a time deposit). Amended return If you receive a Form 1099-INT for interest income on deposits that were frozen at the end of 2013, see Frozen deposits under How To Report Interest Income for information about reporting this interest income exclusion on your tax return. Amended return   The interest you exclude is treated as credited to your account in the following year. Amended return You must include it in income in the year you can withdraw it. Amended return Example. Amended return $100 of interest was credited on your frozen deposit during the year. Amended return You withdrew $80 but could not withdraw any more as of the end of the year. Amended return You must include $80 in your income and exclude $20 from your income for the year. Amended return You must include the $20 in your income for the year you can withdraw it. Amended return Bonds traded flat. Amended return    If you buy a bond at a discount when interest has been defaulted or when the interest has accrued but has not been paid, the transaction is described as trading a bond flat. Amended return The defaulted or unpaid interest is not income and is not taxable as interest if paid later. Amended return When you receive a payment of that interest, it is a return of capital that reduces the remaining cost basis of your bond. Amended return Interest that accrues after the date of purchase, however, is taxable interest income for the year received or accrued. Amended return See Bonds Sold Between Interest Dates , later in this chapter. Amended return Below-Market Loans If you make a below-market gift or demand loan, you must report as interest income any forgone interest (defined later) from that loan. Amended return The below-market loan rules and exceptions are described in this section. Amended return For more information, see section 7872 of the Internal Revenue Code and its regulations. Amended return If you receive a below-market loan, you may be able to deduct the forgone interest as well as any interest you actually paid, but not if it is personal interest. Amended return Loans subject to the rules. Amended return   The rules for below-market loans apply to: Gift loans, Pay-related loans, Corporation-shareholder loans, Tax avoidance loans, and Certain loans made to qualified continuing care facilities under a continuing care contract. Amended return A pay-related loan is any below-market loan between an employer and an employee or between an independent contractor and a person for whom the contractor provides services. Amended return A tax avoidance loan is any below-market loan where the avoidance of federal tax is one of the main purposes of the interest arrangement. Amended return Forgone interest. Amended return   For any period, forgone interest is: The amount of interest that would be payable for that period if interest accrued on the loan at the applicable federal rate and was payable annually on December 31, minus Any interest actually payable on the loan for the period. Amended return Applicable federal rate. Amended return   Applicable federal rates are published by the IRS each month in the Internal Revenue Bulletin. Amended return Some IRS offices have these bulletins available for research. Amended return See chapter 5, How To Get Tax Help , for other ways to get this information. Amended return Rules for below-market loans. Amended return   The rules that apply to a below-market loan depend on whether the loan is a gift loan, demand loan, or term loan. Amended return Gift and demand loans. Amended return   A gift loan is any below-market loan where the forgone interest is in the nature of a gift. Amended return   A demand loan is a loan payable in full at any time upon demand by the lender. Amended return A demand loan is a below-market loan if no interest is charged or if interest is charged at a rate below the applicable federal rate. Amended return   A demand loan or gift loan that is a below-market loan is generally treated as an arm's-length transaction in which the lender is treated as having made: A loan to the borrower in exchange for a note that requires the payment of interest at the applicable federal rate, and An additional payment to the borrower in an amount equal to the forgone interest. Amended return The borrower is generally treated as transferring the additional payment back to the lender as interest. Amended return The lender must report that amount as interest income. Amended return   The lender's additional payment to the borrower is treated as a gift, dividend, contribution to capital, pay for services, or other payment, depending on the substance of the transaction. Amended return The borrower may have to report this payment as taxable income, depending on its classification. Amended return These transfers are considered to occur annually, generally on December 31. Amended return Term loans. Amended return   A term loan is any loan that is not a demand loan. Amended return A term loan is a below-market loan if the amount of the loan is more than the present value of all payments due under the loan. Amended return   A lender who makes a below-market term loan other than a gift loan is treated as transferring an additional lump-sum cash payment to the borrower (as a dividend, contribution to capital, etc. Amended return ) on the date the loan is made. Amended return The amount of this payment is the amount of the loan minus the present value, at the applicable federal rate, of all payments due under the loan. Amended return An equal amount is treated as original issue discount (OID). Amended return The lender must report the annual part of the OID as interest income. Amended return The borrower may be able to deduct the OID as interest expense. Amended return See Original Issue Discount (OID) , later. Amended return Exceptions to the below-market loan rules. Amended return   Exceptions to the below-market loan rules are discussed here. Amended return Exception for loans of $10,000 or less. Amended return   The rules for below-market loans do not apply to any day on which the total outstanding amount of loans between the borrower and lender is $10,000 or less. Amended return This exception applies only to: Gift loans between individuals if the gift loan is not directly used to buy or carry income-producing assets, and Pay-related loans or corporation-shareholder loans if the avoidance of federal tax is not a principal purpose of the interest arrangement. Amended return This exception does not apply to a term loan described in (2) earlier that previously has been subject to the below-market loan rules. Amended return Those rules will continue to apply even if the outstanding balance is reduced to $10,000 or less. Amended return Exception for loans to continuing care facilities. Amended return   Loans to qualified continuing care facilities under continuing care contracts are not subject to the rules for below-market loans for the calendar year if the lender or the lender's spouse is age 62 or older at the end of the year. Amended return For the definitions of qualified continuing care facility and continuing care contract, see Internal Revenue Code section 7872(h). Amended return Exception for loans without significant tax effect. Amended return   Loans are excluded from the below-market loan rules if their interest arrangements do not have a significant effect on the federal tax liability of the borrower or the lender. Amended return These loans include: Loans made available by the lender to the general public on the same terms and conditions that are consistent with the lender's customary business practice; Loans subsidized by a federal, state, or municipal government that are made available under a program of general application to the public; Certain employee-relocation loans; Certain loans from a foreign person, unless the interest income would be effectively connected with the conduct of a U. Amended return S. Amended return trade or business and would not be exempt from U. Amended return S. Amended return tax under an income tax treaty; Gift loans to a charitable organization, contributions to which are deductible, if the total outstanding amount of loans between the organization and lender is $250,000 or less at all times during the tax year; and Other loans on which the interest arrangement can be shown to have no significant effect on the federal tax liability of the lender or the borrower. Amended return For a loan described in (6) above, all the facts and circumstances are used to determine if the interest arrangement has a significant effect on the federal tax liability of the lender or borrower. Amended return Some factors to be considered are: Whether items of income and deduction generated by the loan offset each other; The amount of these items; The cost to you of complying with the below-market loan rules, if they were to apply; and Any reasons other than taxes for structuring the transaction as a below-market loan. Amended return If you structure a transaction to meet this exception and one of the principal purposes of that structure is the avoidance of federal tax, the loan will be considered a tax-avoidance loan, and this exception will not apply. Amended return Limit on forgone interest for gift loans of $100,000 or less. Amended return   For gift loans between individuals, if the outstanding loans between the lender and borrower total $100,000 or less, the forgone interest to be included in income by the lender and deducted by the borrower is limited to the amount of the borrower's net investment income for the year. Amended return If the borrower's net investment income is $1,000 or less, it is treated as zero. Amended return This limit does not apply to a loan if the avoidance of federal tax is one of the main purposes of the interest arrangement. Amended return Effective dates. Amended return    These rules apply to term loans made after June 6, 1984, and to demand loans outstanding after that date. Amended return U. Amended return S. Amended return Savings Bonds This section provides tax information on U. Amended return S. Amended return savings bonds. Amended return It explains how to report the interest income on these bonds and how to treat transfers of these bonds. Amended return U. Amended return S. Amended return savings bonds currently offered to individuals include Series EE bonds and Series I bonds. Amended return For other information on U. Amended return S. Amended return savings bonds, write to:  For Series HH/H: Bureau of the Fiscal Service Division of Customer Assistance P. Amended return O. Amended return Box 2186 Parkersburg, WV 26106-2186  For Series EE and I paper savings bonds: Bureau of the Fiscal Service Division of Customer Assistance P. Amended return O. Amended return Box 7012 Parkersburg, WV 26106-7012  For Series EE and I electronic bonds: Bureau of the Fiscal Service  Division of Customer Assistance P. Amended return O. Amended return Box 7015 Parkersburg, WV 26106-7015 Or, on the Internet, visit: www. Amended return treasurydirect. Amended return gov/indiv/indiv. Amended return htm. Amended return Accrual method taxpayers. Amended return   If you use an accrual method of accounting, you must report interest on U. Amended return S. Amended return savings bonds each year as it accrues. Amended return You cannot postpone reporting interest until you receive it or until the bonds mature. Amended return Cash method taxpayers. Amended return   If you use the cash method of accounting, as most individual taxpayers do, you generally report the interest on U. Amended return S. Amended return savings bonds when you receive it. Amended return But see Reporting options for cash method taxpayers , later. Amended return Series HH bonds. Amended return   These bonds were issued at face value. Amended return Interest is paid twice a year by direct deposit to your bank account. Amended return If you are a cash method taxpayer, you must report interest on these bonds as income in the year you receive it. Amended return   Series HH bonds were first offered in 1980 and last offered in August 2004. Amended return Before 1980, series H bonds were issued. Amended return Series H bonds are treated the same as series HH bonds. Amended return If you are a cash method taxpayer, you must report the interest when you receive it. Amended return   Series H bonds have a maturity period of 30 years. Amended return Series HH bonds mature in 20 years. Amended return The last series H bonds matured in 2009. Amended return The last series HH bonds will mature in 2024. Amended return Series EE and series I bonds. Amended return   Interest on these bonds is payable when you redeem the bonds. Amended return The difference between the purchase price and the redemption value is taxable interest. Amended return Series EE bonds. Amended return   Series EE bonds were first offered in January 1980 and have a maturity period of 30 years. Amended return Before July 1980, series E bonds were issued. Amended return The original 10-year maturity period of series E bonds has been extended to 40 years for bonds issued before December 1965 and 30 years for bonds issued after November 1965. Amended return Paper series EE and series E bonds are issued at a discount. Amended return The face value is payable to you at maturity. Amended return Electronic series EE bonds are issued at their face value. Amended return The face value plus accrued interest is payable to you at maturity. Amended return As of January 1, 2012, paper savings bonds were no longer sold at financial institutions. Amended return    Owners of paper series EE bonds can convert them to electronic bonds. Amended return These converted bonds do not retain the denomination listed on the paper certificate but are posted at their purchase price (with accrued interest). Amended return Series I bonds. Amended return   Series I bonds were first offered in 1998. Amended return These are inflation-indexed bonds issued at their face amount with a maturity period of 30 years. Amended return The face value plus all accrued interest is payable to you at maturity. Amended return Reporting options for cash method taxpayers. Amended return   If you use the cash method of reporting income, you can report the interest on series EE, series E, and series I bonds in either of the following ways. Amended return Method 1. Amended return Postpone reporting the interest until the earlier of the year you cash or dispose of the bonds or the year in which they mature. Amended return (However, see Savings bonds traded , later. Amended return )  Note. Amended return Series EE bonds issued in 1983 matured in 2013. Amended return If you have used method 1, you generally must report the interest on these bonds on your 2013 return. Amended return The last series E bonds were issued in 1980 and matured in 2010. Amended return If you used method 1, you generally should have reported the interest on these bonds on your 2010 return. Amended return Method 2. Amended return Choose to report the increase in redemption value as interest each year. Amended return  You must use the same method for all series EE, series E, and series I bonds you own. Amended return If you do not choose method 2 by reporting the increase in redemption value as interest each year, you must use method 1. Amended return If you plan to cash your bonds in the same year you will pay for higher educational expenses, you may want to use method 1 because you may be able to exclude the interest from your income. Amended return To learn how, see Education Savings Bond Program, later. Amended return Change from method 1. Amended return   If you want to change your method of reporting the interest from method 1 to method 2, you can do so without permission from the IRS. Amended return In the year of change, you must report all interest accrued to date and not previously reported for all your bonds. Amended return   Once you choose to report the interest each year, you must continue to do so for all series EE, series E, and series I bonds you own and for any you get later, unless you request permission to change, as explained next. Amended return Change from method 2. Amended return   To change from method 2 to method 1, you must request permission from the IRS. Amended return Permission for the change is automatically granted if you send the IRS a statement that meets all the following requirements. Amended return You have typed or printed the following number at the top: “131. Amended return ” It includes your name and social security number under “131. Amended return ” It includes the year of change (both the beginning and ending dates). Amended return It identifies the savings bonds for which you are requesting this change. Amended return It includes your agreement to: Report all interest on any bonds acquired during or after the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest; and Report all interest on the bonds acquired before the year of change when the interest is realized upon disposition, redemption, or final maturity, whichever is earliest, with the exception of the interest reported in prior tax years. Amended return   You must attach this statement to your tax return for the year of change, which you must file by the due date (including extensions). Amended return   You can have an automatic extension of 6 months from the due date of your return for the year of change (excluding extensions) to file the statement with an amended return. Amended return On the statement, type or print “Filed pursuant to section 301. Amended return 9100-2. Amended return ” To get this extension, you must have filed your original return for the year of the change by the due date (including extensions). Amended return    By the date you file the original statement with your return, you must also send a signed copy to the address below. Amended return    Internal Revenue Service Attention: CC:IT&A (Automatic Rulings Branch) P. Amended return O. Amended return Box 7604 Benjamin Franklin Station Washington, DC 20044   If you use a private delivery service, send the signed copy to the address below. Amended return Internal Revenue Service Attention: CC:IT&A  (Automatic Rulings Branch) Room 5336 1111 Constitution Avenue, NW Washington, DC 20224    Instead of filing this statement, you can request permission to change from method 2 to method 1 by filing Form 3115. Amended return In that case, follow the form instructions for an automatic change. Amended return No user fee is required. Amended return Co-owners. Amended return   If a U. Amended return S. Amended return savings bond is issued in the names of co-owners, such as you and your child or you and your spouse, interest on the bond is generally taxable to the co-owner who bought the bond. Amended return One co-owner's funds used. Amended return   If you used your funds to buy the bond, you must pay the tax on the interest. Amended return This is true even if you let the other co-owner redeem the bond and keep all the proceeds. Amended return Under these circumstances, the co-owner who redeemed the bond will receive a Form 1099-INT at the time of redemption and must provide you with another Form 1099-INT showing the amount of interest from the bond taxable to you. Amended return The co-owner who redeemed the bond is a “nominee. Amended return ” See Nominee distributions under How To Report Interest Income, later, for more information about how a person who is a nominee reports interest income belonging to another person. Amended return Both co-owners' funds used. Amended return   If you and the other co-owner each contribute part of the bond's purchase price, the interest is generally taxable to each of you, in proportion to the amount each of you paid. Amended return Community property. Amended return   If you and your spouse live in a community property state and hold bonds as community property, one-half of the interest is considered received by each of you. Amended return If you file separate returns, each of you generally must report one-half of the bond interest. Amended return For more information about community property, see Publication 555. Amended return Table 1-2. Amended return   These rules are also shown in Table 1-2. Amended return Child as only owner. Amended return   Interest on U. Amended return S. Amended return savings bonds bought for and registered only in the name of your child is income to your child, even if you paid for the bonds and are named as beneficiary. Amended return If the bonds are series EE, series E, or series I bonds, the interest on the bonds is income to your child in the earlier of the year the bonds are cashed or disposed of or the year the bonds mature, unless your child chooses to report the interest income each year. Amended return Choice to report interest each year. Amended return   The choice to report the accrued interest each year can be made either by your child or by you for your child. Amended return This choice is made by filing an income tax return that shows all the interest earned to date, and by stating on the return that your child chooses to report the interest each year. Amended return Either you or your child should keep a copy of this return. Amended return   Unless your child is otherwise required to file a tax return for any year after making this choice, your child does not have to file a return only to report the annual accrual of U. Amended return S. Amended return savings bond interest under this choice. Amended return However, see Tax on unearned income of certain children , earlier, under General Information. Amended return Neither you nor your child can change the way you report the interest unless you request permission from the IRS, as discussed earlier under Change from method 2 . Amended return Ownership transferred. Amended return   If you bought series E, series EE, or series I bonds entirely with your own funds and had them reissued in your co-owner's name or beneficiary's name alone, you must include in your gross income for the year of reissue all interest that you earned on these bonds and have not previously reported. Amended return But, if the bonds were reissued in your name alone, you do not have to report the interest accrued at that time. Amended return   This same rule applies when bonds (other than bonds held as community property) are transferred between spouses or incident to divorce. Amended return Example. Amended return You bought series EE bonds entirely with your own funds. Amended return You did not choose to report the accrued interest each year. Amended return Later, you transfer the bonds to your former spouse under a divorce agreement. Amended return You must include the deferred accrued interest, from the date of the original issue of the bonds to the date of transfer, in your income in the year of transfer. Amended return Your former spouse includes in income the interest on the bonds from the date of transfer to the date of redemption. Amended return Table 1-2. Amended return Who Pays the Tax on U. Amended return S. Amended return Savings Bond Interest IF . Amended return . Amended return . Amended return THEN the interest must be reported by . Amended return . Amended return . Amended return you buy a bond in your name and the name of another person as co-owners, using only your own funds you. Amended return you buy a bond in the name of another person, who is the sole owner of the bond the person for whom you bought the bond. Amended return you and another person buy a bond as co-owners, each contributing part of the purchase price both you and the other co-owner, in proportion to the amount each paid for the bond. Amended return you and your spouse, who live in a community property state, buy a bond that is community property you and your spouse. Amended return If you file separate returns, both you and your spouse generally report one-half of the interest. Amended return Purchased jointly. Amended return   If you and a co-owner each contributed funds to buy series E, series EE, or series I bonds jointly and later have the bonds reissued in the co-owner's name alone, you must include in your gross income for the year of reissue your share of all the interest earned on the bonds that you have not previously reported. Amended return The former co-owner does not have to include in gross income at the time of reissue his or her share of the interest earned that was not reported before the transfer. Amended return This interest, however, as well as all interest earned after the reissue, is income to the former co-owner. Amended return   This income-reporting rule also applies when the bonds are reissued in the name of your former co-owner and a new co-owner. Amended return But the new co-owner will report only his or her share of the interest earned after the transfer. Amended return   If bonds that you and a co-owner bought jointly are reissued to each of you separately in the same proportion as your contribution to the purchase price, neither you nor your co-owner has to report at that time the interest earned before the bonds were reissued. Amended return Example 1. Amended return You and your spouse each spent an equal amount to buy a $1,000 series EE savings bond. Amended return The bond was issued to you and your spouse as co-owners. Amended return You both postpone reporting interest on the bond. Amended return You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Amended return At that time neither you nor your spouse has to report the interest earned to the date of reissue. Amended return Example 2. Amended return You bought a $1,000 series EE savings bond entirely with your own funds. Amended return The bond was issued to you and your spouse as co-owners. Amended return You both postponed reporting interest on the bond. Amended return You later have the bond reissued as two $500 bonds, one in your name and one in your spouse's name. Amended return You must report half the interest earned to the date of reissue. Amended return Transfer to a trust. Amended return   If you own series E, series EE, or series I bonds and transfer them to a trust, giving up all rights of ownership, you must include in your income for that year the interest earned to the date of transfer if you have not already reported it. Amended return However, if you are considered the owner of the trust and if the increase in value both before and after the transfer continues to be taxable to you, you can continue to defer reporting the interest earned each year. Amended return You must include the total interest in your income in the year you cash or dispose of the bonds or the year the bonds finally mature, whichever is earlier. Amended return   The same rules apply to previously unreported interest on series EE or series E bonds if the transfer to a trust consisted of series HH or series H bonds you acquired in a trade for the series EE or series E bonds. Amended return See Savings bonds traded , later. Amended return Decedents. Amended return   The manner of reporting interest income on series E, series EE, or series I bonds, after the death of the owner (decedent), depends on the accounting and income-reporting methods previously used by the decedent. Amended return Decedent who reported interest each year. Amended return   If the bonds transferred because of death were owned by a person who used an accrual method, or who used the cash method and had chosen to report the interest each year, the interest earned in the year of death up to the date of death must be reported on that person's final return. Amended return The person who acquires the bonds includes in income only interest earned after the date of death. Amended return Decedent who postponed reporting interest. Amended return   If the transferred bonds were owned by a decedent who had used the cash method and had not chosen to report the interest each year, and who had bought the bonds entirely with his or her own funds, all interest earned before death must be reported in one of the following ways. Amended return The surviving spouse or personal representative (executor, administrator, etc. Amended return ) who files the final income tax return of the decedent can choose to include on that return all interest earned on the bonds before the decedent's death. Amended return The person who acquires the bonds then includes in income only interest earned after the date of death. Amended return If the choice in (1) is not made, the interest earned up to the date of death is income in respect of the decedent and should not be included in the decedent's final return. Amended return All interest earned both before and after the decedent's death (except any part reported by the estate on its income tax return) is income to the person who acquires the bonds. Amended return If that person uses the cash method and does not choose to report the interest each year, he or she can postpone reporting it until the year the bonds are cashed or disposed of or the year they mature, whichever is earlier. Amended return In the year that person reports the interest, he or she can claim a deduction for any federal estate tax paid on the part of the interest included in the decedent's estate. Amended return For more information on income in respect of a decedent, see Publication 559, Survivors, Executors, and Administrators. Amended return Example 1. Amended return Your uncle, a cash method taxpayer, died and left you a $1,000 series EE bond. Amended return He had bought the bond for $500 and had not chosen to report the interest each year. Amended return At the date of death, interest of $200 had accrued on the bond, and its value of $700 was included in your uncle's estate. Amended return Your uncle's executor chose not to include the $200 accrued interest in your uncle's final income tax return. Amended return The $200 is income in respect of the decedent. Amended return You are a cash method taxpayer and do not choose to report the interest each year as it is earned. Amended return If you cash the bond when it reaches maturity value of $1,000, you report $500 interest income—the difference between maturity value of $1,000 and the original cost of $500. Amended return For that year, you can deduct (as a miscellaneous itemized deduction not subject to the 2%-of-adjusted-gross-income limit) any federal estate tax paid because the $200 interest was included in your uncle's estate. Amended return Example 2. Amended return If, in Example 1 , the executor had chosen to include the $200 accrued interest in your uncle's final return, you would report only $300 as interest when you cashed the bond at maturity. Amended return $300 is the interest earned after your uncle's death. Amended return Example 3. Amended return If, in Example 1 , you make or have made the choice to report the increase in redemption value as interest each year, you include in gross income for the year you acquire the bond all of the unreported increase in value of all series E, series EE, and series I bonds you hold, including the $200 on the bond you inherited from your uncle. Amended return Example 4. Amended return When your aunt died, she owned series HH bonds that she had acquired in a trade for series EE bonds. Amended return You were the beneficiary of these bonds. Amended return Your aunt used the cash method and did not choose to report the interest on the series EE bonds each year as it accrued. Amended return Your aunt's executor chose not to include any interest earned before your aunt's death on her final return. Amended return The income in respect of the decedent is the sum of the unreported interest on the series EE bonds and the interest, if any, payable on the series HH bonds but not received as of the date of your aunt's death. Amended return You must report any interest received during the year as income on your return. Amended return The part of the interest payable but not received before your aunt's death is income in respect of the decedent and may qualify for the estate tax deduction. Amended return For information on when to report the interest on the series EE bonds traded, see Savings bonds traded , later. Amended return Savings bonds distributed from a retirement or profit-sharing plan. Amended return   If you acquire a U. Amended return S. Amended return savings bond in a taxable distribution from a retirement or profit-sharing plan, your income for the year of distribution includes the bond's redemption value (its cost plus the interest accrued before the distribution). Amended return When you redeem the bond (whether in the year of distribution or later), your interest income includes only the interest accrued after the bond was distributed. Amended return To figure the interest reported as a taxable distribution and your interest income when you redeem the bond, see Worksheet for savings bonds distributed from a retirement or profit-sharing plan under How To Report Interest Income, later. Amended return Savings bonds traded. Amended return   If you postponed reporting the interest on your series EE or series E bonds, you did not recognize taxable income when you traded the bonds for series HH or series H bonds, unless you received cash in the trade. Amended return (You cannot trade series I bonds for series HH bonds. Amended return After August 31, 2004, you cannot trade any other series of bonds for series HH bonds. Amended return ) Any cash you received is income up to the amount of the interest earned on the bonds traded. Amended return When your series HH or series H bonds mature, or if you dispose of them before maturity, you report as interest the difference between their redemption value and your cost. Amended return Your cost is the sum of the amount you paid for the traded series EE or series E bonds plus any amount you had to pay at the time of the trade. Amended return Example. Amended return You traded series EE bonds (on which you postponed reporting the interest) for $2,500 in series HH bonds and $223 in cash. Amended return You reported the $223 as taxable income on your tax return. Amended return At the time of the trade, the series EE bonds had accrued interest of $523 and a redemption value of $2,723. Amended return You hold the series HH bonds until maturity, when you receive $2,500. Amended return You must report $300 as interest income in the year of maturity. Amended return This is the difference between their redemption value, $2,500, and your cost, $2,200 (the amount you paid for the series EE bonds). Amended return (It is also the difference between the accrued interest of $523 on the series EE bonds and the $223 cash received on the trade. Amended return ) Choice to report interest in year of trade. Amended return   You could have chosen to treat all of the previously unreported accrued interest on series EE or series E bonds traded for series HH bonds as income in the year of the trade. Amended return If you made this choice, it is treated as a change from method 1. Amended return See Change from method 1 under Series EE and series I bonds, earlier. Amended return Form 1099-INT for U. Amended return S. Amended return savings bond interest. Amended return   When you cash a bond, the bank or other payer that redeems it must give you a Form 1099-INT if the interest part of the payment you receive is $10 or more. Amended return Box 3 of your Form 1099-INT should show the interest as the difference between the amount you received and the amount paid for the bond. Amended return However, your Form 1099-INT may show more interest than you have to include on your income tax return. Amended return For example, this may happen if any of the following are true. Amended return You chose to report the increase in the redemption value of the bond each year. Amended return The interest shown on your Form 1099-INT will not be reduced by amounts previously included in income. Amended return You received the bond from a decedent. Amended return The interest shown on your Form 1099-INT will not be reduced by any interest reported by the decedent before death, or on the decedent's final return, or by the estate on the estate's income tax return. Amended return Ownership of the bond was transferred. Amended return The interest shown on your Form 1099-INT will not be reduced by interest that accrued before the transfer. Amended return You were named as a co-owner, and the other co-owner contributed funds to buy the bond. Amended return The interest shown on your Form 1099-INT will not be reduced by the amount you received as nominee for the other co-owner. Amended return (See Co-owners , earlier in this section, for more information about the reporting requirements. Amended return ) You received the bond in a taxable distribution from a retirement or profit-sharing plan. Amended return The interest shown on your Form 1099-INT will not be reduced by the interest portion of the amount taxable as a distribution from the plan and not taxable as interest. Amended return (This amount is generally shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Amended return , for the year of distribution. Amended return )   For more information on including the correct amount of interest on your return, see U. Amended return S. Amended return savings bond interest previously reported or Nominee distributions under How To Report Interest Income, later. Amended return    Interest on U. Amended return S. Amended return savings bonds is exempt from state and local taxes. Amended return The Form 1099-INT you receive will indicate the amount that is for U. Amended return S. Amended return savings bonds interest in box 3. Amended return Do not include this income on your state or local income tax return. Amended return Education Savings Bond Program You may be able to exclude from income all or part of the interest you receive on the redemption of qualified U. Amended return S. Amended return savings bonds during the year if you pay qualified higher educational expenses during the same year. Amended return This exclusion is known as the Education Savings Bond Program. Amended return You do not qualify for this exclusion if your filing status is married filing separately. Amended return Form 8815. Amended return   Use Form 8815 to figure your exclusion. Amended return Attach the form to your Form 1040 or Form 1040A. Amended return Qualified U. Amended return S. Amended return savings bonds. Amended return   A qualified U. Amended return S. Amended return savings bond is a series EE bond issued after 1989 or a series I bond. Amended return The bond must be issued either in your name (sole owner) or in your and your spouse's names (co-owners). Amended return You must be at least 24 years old before the bond's issue date. Amended return For example, a bond bought by a parent and issued in the name of his or her child under age 24 does not qualify for the exclusion by the parent or child. Amended return    The issue date of a bond may be earlier than the date the bond is purchased because the issue date assigned to a bond is the first day of the month in which it is purchased. Amended return Beneficiary. Amended return   You can designate any individual (including a child) as a beneficiary of the bond. Amended return Verification by IRS. Amended return   If you claim the exclusion, the IRS will check it by using bond redemption information from the Department of Treasury. Amended return Qualified expenses. Amended return   Qualified higher educational expenses are tuition and fees required for you, your spouse, or your dependent (for whom you claim an exemption) to attend an eligible educational institution. Amended return   Qualified expenses include any contribution you make to a qualified tuition program or to a Coverdell education savings account. Amended return For information about these programs, see Publication 970, Tax Benefits for Education. Amended return   Qualified expenses do not include expenses for room and board or for courses involving sports, games, or hobbies that are not part of a degree or certificate granting program. Amended return Eligible educational institutions. Amended return   These institutions include most public, private, and nonprofit universities, colleges, and vocational schools that are accredited and eligible to participate in student aid programs run by the Department of Education. Amended return Reduction for certain benefits. Amended return   You must reduce your qualified higher educational expenses by all of the following tax-free benefits. Amended return Tax-free part of scholarships and fellowships. Amended return Expenses used to figure the tax-free portion of distributions from a Coverdell ESA. Amended return Expenses used to figure the tax-free portion of distributions from a qualified tuition program. Amended return Any tax-free payments (other than gifts or inheritances) received as educational assistance, such as: Veterans' educational assistance benefits, Qualified tuition reductions, or Employer-provided educational assistance. Amended return Any expense used in figuring the American Opportunity and lifetime learning credits. Amended return For information about these benefits, see Publication 970. Amended return Amount excludable. Amended return   If the total proceeds (interest and principal) from the qualified U. Amended return S. Amended return savings bonds you redeem during the year are not more than your adjusted qualified higher educational expenses for the year, you may be able to exclude all of the interest. Amended return If the proceeds are more than the expenses, you may be able to exclude only part of the interest. Amended return   To determine the excludable amount, multiply the interest part of the proceeds by a fraction. Amended return The numer