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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4026
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I inherited savings bonds when my dad passed away 9/14/11.

Customer Question

I inherited savings bonds when my dad passed away 9/14/11. My sister the Executor cashed them all in and then they were split 4 ways (I have 2 sisters and 1 brother). The other day, I received a 1099-INT from the "Bureau of Public Debt (whatever that is!) showing interest on the bonds. Does that go on my dad's return or do I have to claim the interest on my return.?
Submitted: 2 years ago.
Category: Tax
Expert:  Stephen G. replied 2 years ago.

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Customer:

OK

Stephen E. Grizey :

It sounds like your sister provided your social security number when she cashed in the bonds; the situation was that the bonds carried a beneficiary designation of all four of you or the bonds were divided up in terms of the beneficiary designation.

Customer:

We each had to go to our own bank and fill out a form in front of them and then send it back to the treasury dept.

Stephen E. Grizey :

The interest wouldn't go on your Dad's return as they weren't cashed in until after he passed away. The fact that you received the 1099 tells me that there was a beneficiary designation.

Stephen E. Grizey :

OK, as I said, that makes sense; that would be income on your federal return but not on your Illinois return.

Stephen E. Grizey :

Please remember to "ACCEPT". Feedback, if you have time & bonuses where you think they are warranted are always most appreciated. I'll be happy to answer any follow-up questions you may have.

Customer:

So, I do have to enter it as interest on my Federal return, but not the Illinosi one. Doesn't the Illinois return just ask for adjusted gross income which would include that interest?

Stephen E. Grizey :

Yes, but there will be an adjustment section where you subtract "US Government Interest". By federal law, the states can't tax interest on US Government interest.

Stephen E. Grizey :

Please remember to "ACCEPT". Feedback, if you have time & bonuses where you think they are warranted are always most appreciated. I'll be happy to answer any follow-up questions you may have.

Customer:

OK. Thank you for your help.

Stephen E. Grizey :

You are welcome. Sorry about your Dad. It's never easy.

Customer:

Yeah, I lost my mom in April. My dad was in good health, but fell and hit his head and that is what killed him. And he was home alone so I am tortured by the fact that he died alone.

Stephen E. Grizey :

Oh boy.....a real tragedy.........

Customer:

Yes, I would much rather have him than his money. I just wasn't prepared for "added income" this year. But, from what you say, I have no choice. Thanks again.

Stephen E. Grizey :

You are correct. The only option would have been to wait until 2012 to cash them in.

Customer:

Wish I had known that. Oh well. If I hit accept, I will not be locked into any contract, will I because I usually do my own taxes and I don't want to have to pay for any service I don't want after my discussion with you.

Stephen E. Grizey :

Oh now................we don't do tax returns here............just answer questions..........and in fact you never even have to pay if you aren't happy with the answer (sometimes we get blamed for "bad news" but it just comes with the territory);

Stephen E. Grizey :

Oh now should be Oh no.

Customer:

That's crazy. People should be honest. You have me my answer and I'm sure this route was cheaper than having my taxes done professionally. I will accept now.

Customer:

have should be "gave"!

Stephen E. Grizey :

OK, don't forget to make the adjustment for Illionois.

Customer:

I won't forget!!!! Thanks again!

Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 4026
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and 7 other Tax Specialists are ready to help you

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