By David Enna, Tipswatch.com

One of the “interesting” challenges in dealing with the U.S. government’s TreasuryDirect website comes each January, when you might — or might not — need to go in search of federal tax forms.

If you had transactions in 2023 at TreasuryDirect, with the exception of simply buying savings bonds, you should have already received this email:

The 2-minute video (which was produced several years ago) is actually helpful, and it plays on YouTube, so you can watch it right here:

As the video notes, if you are part of a couple with separate accounts, or if you have linked accounts from converting paper I Bonds, or child accounts, or separate trust or entity accounts, you will need to go to the linked accounts and get separate 1099s. In the case of a spouse, you will need to log out and re-login to that separate account to find the second 1099. Here is what TreasuryDirect says:

It is important to check ALL of your accounts, as a separate Form 1099 will be created for each one. If you have established Custom, Minor-Linked, or Conversion-Linked accounts, you must access each account to print the Form 1099 for that account.

However, if you use your TreasuryDirect account simply to buy savings bonds (I Bonds or EE Bonds) and didn’t redeem any or have any mature in 2023, there will be no taxable transactions and you won’t have 1099s. You will see this on TreasuryDirect’s ManageDirect page:

TreasuryDirect is NOT going to mail you these forms. You need to hunt them down.

Important: Once you are inside the account section of TreasuryDirect, never click on your browser’s back button. If you do, you will be booted out of TreasuryDirect and you will have to log in again. To navigate, either click on the top row of tabs or click “return” at the bottom of most pages.

Here is the basic step-by-step process for finding each set of 1099s:

1. Log into your TreasuryDirect account on this page. Click “Next.”
2. Enter your account number.
3. After you enter the account number, you will get a message that a verification code has been sent to the associated email address. Open the email, copy the code and paste it in the box. Click “Submit.”
4. Enter your password and click “Submit.”
5. Now you are on your MyAccount page on TreasuryDirect. From here you can click on your Investor InBox in the upper navigation to see further instructions. The message will be titled “Tax Statement Notification.”
6. Next, click on the “ManageDirect” link in the upper navigation. Under the heading, Manage My Taxes, select the link for the 2023 tax year. Then click the link: “View your 1099 for tax year 2023.” (Make sure to select 2023, not 2024!)
7. At this point, you may get a huge listing of all of your interest payments, savings bond redemptions, potential capital gains and original issue discount accruals for Treasury Inflation-Protected Securities.
8. TreasuryDirect does not offer an easily printable .pdf version of this form. To print it, click anywhere on the browser page and hit CONTROL P on a PC or COMMAND P on a Mac. This should open up a dialog to print the pages. (Mine was 12 pages long.)
9. Print the 1099.
10. Don’t have a printer? You can copy the entire text of the 1099 and paste it into a text or Word document. Save that file for reference when you fill out your tax return.
11. At the bottom of the page, click on “Return.” Repeat the process for any additional spousal or linked accounts.

Examine the 1099

There is a lot to see here, and you don’t want to miss anything that needs reporting to the IRS. On a 1099 from any brokerage or bank, everything is nicely organized and summed up, with clear references to the proper boxes on your tax filing. Not so with TreasuryDirect. In fact, this 1099 is actually a collection of 1099 forms, each with special purposes.

Form 1099-INT Interest Income

If you invested in any T-bills, Treasury notes or bonds, TIPS or redeemed savings bonds in 2023, you are going to see all interest-paying transactions listed here. In 2023 I was rolling over staggered 13- and 26-week T-bills at TreasuryDirect, plus had a collection of TIPS, plus redeemed a couple 0.0% I Bonds, so my list was enormous: 44 items.

At the bottom of this long list, way at the bottom, is the total. Scroll all the way back up to the top to see that this total is Interest On U.S. Savings Bonds And Treas. Obligations and it goes in Ref. Box 3 on the federal fax form when you are filling out the section for 1099-INT. Here is the definition of Box 3:

Shows interest on U.S. Savings Bonds, Treasury Bills, Treasury Notes, Treasury Bonds and Treasury Inflation-Protected Securities (TIPS). … This interest is exempt from state and local income taxes.

You want to make sure the interest gets recognized as coming from U.S. Treasurys, because it will be free of state income taxes.

If you had any proceeds withheld for tax purposes (highly unlikely) those totals will be listed in column 5 of this section.

Form 1099-B Proceeds from Broker and Barter Exchange Transactions

There are several sections to for 1099-B and I generally have just a few transactions listed here. To me, this seems like a relatively new part of TreasuryDirect reporting, which shows an Accrued Market Discount on longer-term investments that matured in 2023.

I had three TIPS mature in 2023. Two had $0.00 “gains” reported here and one had $210.47. I am assuming this resulted from an initial discount at purchase. TreasuryDirect says these proceeds should be reported to the IRS on form 8949, part D, which is for a long-term gain, but the gain goes in Box 1f, which is for an adjustment to a gain.

I am generally baffled by Form 1099-B, but the amount of taxable long-term gain is so small I just report it and forget it.

Form 1099-OID Original Issue Discount

This is a very important section for investors who hold TIPS at TreasuryDirect. The 1099-OID lists annual inflation accruals for every TIPS held in the TreasuryDirect account in 2023. These inflation accruals are federally taxable in the year they were earned, even though they were not paid out but just added to principal.

Long-time investors in TIPS are familiar with the 1099-OID, but new investors at TreasuryDirect need to pay heed to this section and report it on their federal tax return. In my example here, I am including the first amount because it is negative for the half month before CUSIP 912828UH1 matured in January 2023. So yes, these OID numbers will be negative in times of deflation.

You won’t often see a negative number for any TIPS you held for a full year. But in this case, the holding matured on January 15, 2023, so the deflationary period was for only a half month. TreasuryDirect notes:

Report this amount as interest income on your federal income tax return. … This OID is exempt from state and local income taxes. If the number in this box is negative, it represents a deflation adjustment.

Final thoughts

It should be obvious at this point that I am no tax expert, so nothing you just read should be considered tax advice. Still, getting these 1099s from TreasuryDirect is EXTREMELY IMPORTANT. You are going to get one email with a fairly cryptic message. That’s it. Nothing in the mail. No easy-to-read tax summary like you receive from your broker. It’s up to you to go to TreasuryDirect, find the 1099s, print them, decipher them and report them on your tax return for 2023.

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David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.