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IRS insists we don't owe tax on savings bonds

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Latest post Sat, Aug 6 2016 11:30 AM by adjuster jack. 2 replies.
  • Fri, Aug 5 2016 12:58 PM

    • granmaw
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    • Joined on Tue, Mar 4 2008
    • VA
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    IRS insists we don't owe tax on savings bonds

    We are senior citizen who file our own taxes. In 2015 I cashed in some mature EE bonds which were purchased by my now-deceased mother in 1985.  My name but not my SS number was also on the bonds.  I sent the IRS a check for the estimated tax and included the interest on the bonds in schedule B (along with the payment I'd made on the appropriate line) when we filed our taxes.  Two months later we received a check in excess of our expected refund in the exact amount of the estimated tax I'd paid.  On advice of an accountant, we returned the check & an explanation.  He said not to waste our time calling the IRS.

    Meanwhile I received a phone call and then a letter from the bank where I'd cashed the bonds stating they had neglected to report them to the IRS at the time but had now done so.

    Yesterday we received a letter from the IRS stating that the estimated payment for interest on the bonds was not necessary and we would be receiving a refund check for the higher amount.  I know they are wrong but I am so frustrated I am tempted to cash it.  But I am afraid it will come back to bite in in a couple years plus I try to be honest in all my dealings.  Meanwhile of course we have yet to enjoy a penny of the refund actually owed us.  The only other thing I can think of is to contact our Congressman.  Aren't they supposed to help with bureaucratic  screw-ups?

  • Fri, Aug 5 2016 2:58 PM In reply to

    Re: IRS insists we don't owe tax on savings bonds

    Contact your congressman?  While I suppose some members of Congress will have their staffs look into things like this, I suspect that sort of thing is incredibly rare.  I also suspect you'd be the first person in the history of ever to try and involve a member of Congress in order to persuade the IRS to take MORE of your money.

    If you really want to be careful, but the amount in question aside and don't spend it.  If nothing happens after a few years (I believe the appropriate time period is three years), then forget about it.

  • Sat, Aug 6 2016 11:30 AM In reply to

    Re: IRS insists we don't owe tax on savings bonds

    I know they are wrong

    Even if they are wrong, you have enough documentation from the IRS to avoid any penalties if the IRS decides it made a mistake.

    Till then I suggest you cash the check and enjoy it. If you want to put money in savings to cover it just in case, that's up to you.



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