- 1). Obtain from your buyer their social security number. The buyer may be subject to a $50 penalty if they do not provide this information, according to IRS Publication 550.
- 2). Keep accurate records of the amount of interest you receive during the calendar year.
- 3). Complete Form 1040EZ if your taxable interest income is less than $1,500. Enter the amount of interest received on the line labeled "Taxable Interest."
- 4). Complete Form 1040 Schedule B Part 1 or 1040A Schedule 1 Part 1 if you have more than $1,500 in taxable interest income. Enter the buyer's name, address, social security number and amount of interest received as the first listing on Schedule B or Schedule 1.
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