Taxes on savings bonds & debt settlements?

So I am planning on taking out savings bonds that I have to help pay credit card & personal loan debt. I'm unsure of how it all works. I know that savings bonds & debt settlements will be reported to the IRS for federal income taxes. However, I'm not sure if I have to report any of that to the state & local taxes as well. I live in the state of PA. Also, does anyone know how much you have to make supposed before you start owing taxes?

4 Answers

Relevance
  • NA
    Lv 7
    5 months ago

    BTW, the amount you don't pay on the debt is taxable too (unless you can prove you are insolvent).

  • Bob
    Lv 7
    5 months ago

    Yes will have to pay taxes that you earned on the bonds,the IRS will send you a 1099 that shows the amount of money that you got in interest from selling the bonds.

  • 5 months ago

    Early next year, you will get a 1099 form that shows the amount of interest that you received after selling the bonds. You already know that.

    Interest earnings from the US government are tax-exempt in every state, so when you do your state income tax, there will be a line on your state income tax form asking you to deduct the income you got from federal obligations. (I live in IL and that's how it works here; and my daughter who lives in WI tells me that how it works in her state, too.)

  • Susie
    Lv 6
    5 months ago

    The interest that is earned on the bonds will be taxable and need to be reported on ALL taxes that you file. If pretax money was used to buy the bonds THEN the whole value of the bond will be taxable on whatever taxes you have to file.

    • NA
      Lv 7
      5 months agoReport

      Using pre tax money is not possible. Cash only.

Still have questions? Get answers by asking now.