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savings bonds: claim early withdraw penalty (line 30?)

  
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Subject Author Date
savings bonds: claim early withdraw penalty (line 30?) leithajones 01-01-2007
Posted by leithajones on January 1, 2007, 12:09 am
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 i know if i break up a CD early, i'll get a 1099 that will
show the penalty amount and i can input that on line 30 on
the 1040.

however, i have been unable to get a clear answer if this
apples to EE and I Bonds. it is very clear that the
government applies a 3-month penalty to bonds recently
purchased but redeemed prior to holding 5 years (even
specifying it applies to the last three months of current
interest rate).

but, the one year i cashed a bond prior to 2006, the bank's
1099 didn't show a penalty.

i'm guessing i can't claim the amount of the penalty, since
i haven't found anything to denote these bonds as
applicable, but would like a confirmation that i can't.

thank you.

<< ======================================================= >>
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<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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Posted by Bill Brown on January 2, 2007, 4:07 am
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 leithajones@verizon.net wrote:

> i know if i break up a CD early, i'll get a 1099 that will
> show the penalty amount and i can input that on line 30 on
> the 1040.
>
> however, i have been unable to get a clear answer if this
> apples to EE and I Bonds. it is very clear that the
> government applies a 3-month penalty to bonds recently
> purchased but redeemed prior to holding 5 years (even
> specifying it applies to the last three months of current
> interest rate).
>
> but, the one year i cashed a bond prior to 2006, the bank's
> 1099 didn't show a penalty.
>
> i'm guessing i can't claim the amount of the penalty, since
> i haven't found anything to denote these bonds as
> applicable, but would like a confirmation that i can't.

I'm guessing you got the net amount of interest (after
penalty) from the bank when you cashed in the bond and that
net amount is what is shown on the 1099. It has already been
deducted for you. You don't get to deduct it again.

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

Posted by Herb Smith on January 2, 2007, 4:07 am
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leithajones@verizon.net wrote:

> i know if i break up a CD early, i'll get a 1099 that will
> show the penalty amount and i can input that on line 30 on
> the 1040.
>
> however, i have been unable to get a clear answer if this
> apples to EE and I Bonds. it is very clear that the
> government applies a 3-month penalty to bonds recently
> purchased but redeemed prior to holding 5 years (even
> specifying it applies to the last three months of current
> interest rate).
>
> but, the one year i cashed a bond prior to 2006, the bank's
> 1099 didn't show a penalty.
>
> i'm guessing i can't claim the amount of the penalty, since
> i haven't found anything to denote these bonds as
> applicable, but would like a confirmation that i can't.

The "penalty" you seem to be talking about is really a
forfeiture of interest on the bond. Since you never
received the interest, you also never claimed it as income
and paid tax on it. There is no deductible penalty to
claim.

<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>

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