Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income

Interest Income

Topic Activity

Taxpayer Interview and Tax Law Application

Barbara Smith is a clerk with the United States Postal Service. She has one Form W-2.

Sample Interview
Volunteer Says…   Barbara Responds…
 
Now we will complete the income section of your return. I believe you told me that you work at the post office? Yes. Here is my W-2.
 
Are you employed by anyone else? No way, they keep me busy enough at the post office!
 
Let me enter your Form W-2 information…. Did you have any disability income? No, I'm not disabled.
 
Now, let's go on to interest income. Did you earn any interest on checking accounts, savings accounts, or a certificate of deposit? Yes, I have a savings account that earns interest. Here is the 1099-INT.
 
What about U.S. savings bonds? I know that a lot of postal employees buy them at work. Yes, I do, every pay period.
 
Are they for educational purposes or just an investment? No, they aren't educational. I don't have any information about my bonds with me. Why would I need that?
 
Some people report the interest as it accrues every year. You have to make this decision in the first year after you buy the bonds. Have you ever declared accrued interest from your savings bonds on your federal tax return? Oh, no, never.
 
Well, did you redeem any bonds or did any of them mature during this tax year? No to both questions. I've been buying them for 15 years and they don't become fully mature for 30 years.
 
Okay, then it sounds like your only interest income is from the savings account. Let's enter that now. Yes.