Page 69 - Interest Income - Individuals Handbook
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U.S Treasury Bills, Notes and Bonds
Treasury Bills
Taxation of Interest These bills generally have a 4-week, 13-week, 26-week, or
52-week maturity period. They are generally issued at a
Interest income from Treasury bills, notes, and bonds is discount in the amount of $100 and multiples of $100. The
subject to federal income tax but is exempt from all state
and local income taxes. You should receive a Form 1099- difference between the discounted price you pay for the
bills and the face value you receive at maturity is interest
INT showing the interest paid to you for the year in box 3.
Payments of principal and interest will generally be income. Generally, you report this interest income when
the bill is paid at maturity. If you paid a premium for a bill
credited to your designated checking or savings account by (more than the face value), you generally report the
direct deposit through the TreasuryDirect® system.
premium as a section 171 deduction when the bill is paid
at maturity.
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