Series HH/H Tax Considerations

Notice: As of September 1, 2004, the U.S. Treasury is no longer issuing HH/H savings bonds. Investors are no longer able to reinvest HH/H Bonds or exchange EE/E Bonds for HH Bonds.

If you own HH/H Bonds, you need to be aware of the following federal income tax considerations:

  • HH/H interest paid every six months is reportable as income for the period it's earned, and not when it's received. Interest is reported under the taxpayer identification number of the owner or principal co-owner.
  • Accrued interest from EE/E, F, or J Bonds deferred when HH/H Bonds were purchased is reportable for the tax year in which HH/H Bonds are redeemed, reissued in a reportable event, or reach final maturity.
  • When HH/H Bonds are redeemed, accrued interest is reported on an interest income statement (1099-INT) under the taxpayer identification number of the person to whom the bonds are paid in accordance with the governing regulations.

An interest income statement (1099-INT) is sent by January 31 showing the interest earned for the previous year. Interest income is exempt from state and local income taxes. For further information, see IRS Publication 550 "Investment Income and Expenses."

Reissuing HH/H Bonds

For information about taxes on reissued savings bonds, see Reissuing or Replacing HH/H Bonds

Federal Income Tax Withheld

Under certain circumstances, the Internal Revenue Service may require the Bureau of the Public Debt to withhold and pay to the IRS payments due to be made to a taxpayer. This is known as backup withholding. See IRS Form W-9, Request for Taxpayer Identification Number and Certification, for information on backup withholding.

Deferred Reporting

If you decided to exchange your EE/E Bonds (on which you have deferred reporting the interest) for HH Bonds, you may continue to defer reporting this accrued interest until:

  • The HH Bonds you received in exchange are redeemed.
  • The HH Bonds stop earning interest in 20 years.
  • The bonds are reissued as a reportable event.

The total amount of the tax-deferred interest is divided proportionally among the HH Bonds issued and the respective amount is shown on the front of each bond.

Reporting Deferred Interest Paid

  • If you've redeemed your HH/H Bonds during the calendar year, reissued bonds in a reportable event, or owned HH/H Bonds that had reached their final maturity, the accrued interest is taxable.
  • If you had exchanged your EE/E Bonds for HH Bonds during the calendar year and not all the value of the EE/E Bonds was used toward the purchase, then the amount refunded is taxable up to the amount of accrued interest on the EE/E Bonds you're exchanging.

Reporting Responsibility

  • If the bond is registered to a single owner, then it's their responsibility to include any reportable interest earned on their federal income tax return.
  • If two people are named on the bond as co-owners, it's the responsibility of the individual who purchased the bond or received it as a gift, inheritance, or by court order, to include any interest earned on their federal income tax return.

For information on reporting the deferred interest on a deceased bond owner's final Federal income tax return, see Death of a Savings Bonds Owner