For Series EE/E Bonds or Savings Notes:

You have the choice of reporting interest earned on your savings bonds each year or deferring interest reporting until your bond is cashed, stops earning interest at final maturity, or is disposed of in some other way (such as an ownership change through a reissue transaction). Whenever you report savings bonds interest, it should be included with other interest income on your Federal income tax return.

If you choose to report interest annually, you may want to get a copy of Public Debt Form 3501. This table compares the value of your bonds from one year to the next and will help you determine how much interest you should report. When you cash your bonds, all of the interest that they have earned will be reported to the IRS. Therefore, you should keep good records so that you can show the IRS that you have been reporting all along.

If you have been deferring interest reporting, you can begin to report interest annually at any time. In the year you want to start annual reporting, you will need to report all interest earned to date (and not previously reported) for all of your savings bonds and notes. Once you start annual reporting you must continue to report interest earned annually for all savings bonds and notes you own and any you may acquire. In order to change from annual reporting back to deferred reporting, you must get approval from IRS (refer to IRS Publication 550).

When bonds are in the name of one owner, the owner reports the interest on his Federal income tax return. Things get a little more complicated for bonds in co-ownership form. In this case, interest is reported by the principal co-owner. You are a principal co-owner if your money was used to buy the bond or you got the bonds as a gift, through inheritance, or by court order and then added another co-owner.

See also:

Who Can Own Bonds?
Series EE Savings Bonds
Series EE Bonds for Education
Series EE/E Bonds for Retirement

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