What is deferred interest on Series H Savings Bond?

I inherited two Series H Bonds back in 1995; one for $5,000 and one for $10,000. I am considering cashing in the $10,000 H bond. I am currently getting an interest payment twice a year.

What is this 'interest deferred' on the front of the bond? What does it mean? I guess my real question is - since I inherited this, I don't know if taxes have been paid on it or not.

If I cash this, will that basically be adding $10,000 to my W-2 income earned, or is it only on the interest earned? I've been getting the 1099 tax form and been reporting the interest received for some time now, but I guess I'm unclear what ramifications will ensue if I cash this now. Tom's Response If you cash the $10,000 H bond, you'll receive $10,000 in cash and a 1099-INT for the amount of deferred interest shown on the front of the bond.

Here's the background - the person you inherited the H bond from once had Series E or EE Savings Bonds. The interest earned on these was added to the value of the bond and the ... more.

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