tax evasion on savings bonds?

Question

I took out a few hundred via savings bonds, and have not yet reported the tax I was just curious as what the fine usually is if I dont, or the penalty. Thanks!

Answer 1

You should get or should have gotten a 1099-Int from whatever bank you cashed in the savings bonds at. That interest will be reported to the IRS through them, and they will be expecting you to also report it on your tax return. They'll match up what you report with what you should have reported, and they'll send you a letter saying that they've either reduced your refund, or that you owe more tax. If you owe more tax they may or may not add on interest and penalties to you.

Answer 2

When you say you, "took out a few hundred", if you mean you sold some savings bonds in your name and the net payment was $200, then only the interest the bonds earned is taxable which is probably much less than $200. In fact, the interest may be less than $10 which would mean the bank won't even issue you (or the IRS) a 1099. If you didn't get a 1099, and it didn't get lost in the mail, then the IRS didn't get one either and they have no idea about your unreported interest.

You still need to report interest regardless if you received a 1099, but in all honesty, how do you know how much interest the bonds generated?

Finally, even if you did get a 1099 with interest, the IRS may still not come after you IF this interest would not have made a difference in your tax liability. For example, if you made $100 in interest and your only other income was a W-2 with $2000, then your tax liability would be $0. The $100 makes no difference. You don't need to file and you don't need to report the interest.

Answer 3

If you cashed them in but didn't report the interest as income for that year, you'll eventually receive a letter from the IRS telling you how much additional taxes you owe. It can take a year or more after your return is filed to catch it and send you the letter. If the amount you took out was a few hundred dollars, the penalty shouldn't be much if anything, but you will have to pay the additional taxes on the interest.