Forgot to Include I-Bond 1099-INT on My Tax Return - What Now?

The good news is this happens more often than you think, and the IRS has clear procedures for handling it. Since your federal return has already been accepted, you should file an amended return (Form 1040-X) to report the additional income from your I-Bonds. While you could technically wait for the IRS to catch it (they will eventually since they receive a copy of your 1099-INT), being proactive by filing an amendment shows good faith and may help reduce or eliminate any potential penalties. The IRS is generally more lenient when taxpayers voluntarily correct their mistakes. If you're expecting a refund, it's usually best to wait until you receive it before filing the amendment, as amending now could delay your original refund. Just don't wait too long - aim to file the amendment within the next couple of months.

I was in almost this exact situation last year with missing I-Bond interest on my return. After trying to figure it out myself for hours and getting nowhere, I found this AI tax assistant at https://taxr.ai that literally saved me so much stress. You upload your docs (I uploaded my Treasury Direct 1099-INT and my already-filed return) and it analyzed everything and gave me specific steps for my situation. The thing that surprised me was how it explained exactly which forms I needed for the amendment and even pointed out a deduction I could take that partially offset the additional tax I owed. It also calculated my estimated penalty (which ended up being super small).

Just wanted to update and say I tried that taxr.ai tool someone mentioned after being skeptical. It was actually really helpful for my situation with a missed 1099-INT! The system immediately identified that I needed to file a 1040-X but suggested waiting until after receiving my original refund. It even calculated my potential underpayment penalty (which was only about $8) and showed me how to request abatement of that penalty since this was my first time making this mistake. The step-by-step instructions for completing each line of the 1040-X for my specific situation was exactly what I needed. It helped with my state amendment requirements too, which I wouldn't have known about otherwise. Definitely easier than the hours I would have spent researching on my own!

If you're planning to call the IRS to ask about your situation (which honestly isn't a bad idea), save yourself HOURS of frustration on hold by using https://claimyr.com instead. I had a similar issue with unreported interest income last year and needed to speak with someone at the IRS directly. I tried calling myself first - waited on hold for 2+ hours before getting disconnected. Then I tried using Claimyr's service where they basically wait on hold with the IRS for you, then call you when an agent is actually ready to talk. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c When I finally got through to an IRS rep, they confirmed I should file an amended return but also gave me specific guidance on how to explain the situation to potentially avoid penalties. Having that conversation was way more helpful than just guessing what to do.

I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it myself since I needed to ask about my missed 1099 situation too. It legitimately works exactly as described. I got a call back when an IRS agent was on the line, and I was able to explain my situation directly to them. The agent confirmed I should file a 1040-X but also explained that since my unreported interest was under $1,000, I qualified for a first-time penalty abatement that would likely waive any penalties if I filed the amendment promptly. That single conversation saved me so much stress - knowing exactly what to do from an official source instead of just guessing or piecing together advice from the internet. Definitely worth it for the time saved alone.

Another option you have is to wait until you get a CP2000 notice from the IRS. They match 1099s with returns and will eventually catch the discrepancy. The notice will show the proposed change to your tax (the additional tax plus interest). You can then just agree and pay. I did this once with a small 1099-INT I forgot, and while I did have to pay some interest, there wasn't a separate penalty. The whole process was actually pretty straightforward.

Has anyone considered that this might actually impact your state taxes too? When I had a similar situation, I had to file amended returns for both federal AND state because the additional income changed my state tax liability as well.

I went through this exact situation two years ago with a forgotten 1099-INT from my I-Bonds. Here's what I learned from experience: First, don't panic - this is incredibly common and the IRS deals with it all the time. Since your federal return is already accepted, you have two main options: 1. File Form 1040-X (amended return) proactively - this shows good faith and you can potentially avoid penalties 2. Wait for the IRS to catch it and send you a CP2000 notice I chose option 1 and filed the amendment about 6 weeks after receiving my original refund. The process was straightforward - just report the additional income on the 1040-X and pay the extra tax owed. Since it was my first time making this mistake and the amount was relatively small, I was able to request first-time penalty abatement and only paid the additional tax plus minimal interest. One thing to definitely check: if your state taxes income, you'll likely need to file a state amendment too once your federal amendment is processed. Don't forget that part! The whole thing ended up being much less stressful than I initially thought. The IRS processed my amendment without any issues and I didn't face any additional scrutiny on future returns.