Calculate interest on bond

mo#nguus3

If bond purchased at a discount in secondary market, is interest the gain on the bond if held to maturity less the accrued interest. Also, if gain on bond if sold the difference between the selling price and the cost of the bond not including accrued interest?

KristineS

Hi monguuse,

I can provide you with some general guidance regarding the reporting of bond interest.

Your question is more technical in nature in determing what or how bond interest is calculated, maturity date, interest rate, face value, discount rate, etc., rather than tax return specific. Plus, there are many different types of bonds including Series E, EE, I, G, H, K, Corporate bonds, iBonds, and so forth.

Some bond interest may be excluded from reporting, such as series EE when meeting the four exclusion requirements, or if used to finance government operations and issued by a state, the District of Columbia, or a U.S. territory. It's reportable, but not taxable at the federal level.

Bond interest that needs to be reported on a tax return is going to be included on Form 1099-INT or Form 1099-OID.

Depending on whether you have paper bonds or electronic bonds, you can use the Treasury Direct savings bond calculator for paper Series E, EE, I bonds to find out the total interest earned and year-to-date interest.