Has anyone else run into this? I entered all my data into H&R Block software and got to the final steps of preparing to file electronically. I entered all my checking account information, scheduled the date I would pay my taxes due to the IRS and then clicked on the final step which was to do the actual filing. To my great surprise, the software came back with a message that said: "Unfortunately, you can?t e-file this year...This return cannot be electronically filed because you have a line entry on Schedule B for previously reported bond interest adjustment. You?ll have to print and mail your 2019 return instead".
What they are referencing is that I am using the accrual method of EE Savings Bond interest reporting, which is allowed under IRS rules. That means I have EE savings bonds which I have held since 1992 and years ago decided to pay the tax on the accrued interest to that point. Every year since then I have paid tax on the interest earned in that year, even though I still have the bonds. In 2019 I cashed a couple of bonds and the IRS sent me a 1099 that included all the interest that had accrued since 1992, much of which I had already paid. So again, following IRS rules, I reported the 1099 amount on Schedule B but then deducted the amount that I had already paid. The H&R Block software understood what I was doing and gave me a correctly formatted Schedule B. Yet despite creating the Schedule B properly, the software still wouldn't let me file electronically.
So I pursued this issue through H&R Block Support, and they eventually sent me this message: We have gotten word back from our Development department and they are saying "The program is working as expected. The Schedule B US Savings Bonds adjustment for interest previously reported is required to be paper filed so the IRS can examine the return before accepting the return as properly filed. ".
Does this make sense to anyone? I have looked through various IRS publications but can't see anything anywhere that says they won't accept an electronic filing if there is a savings bond adjustment on Schedule B. I've asked the H&R Support people to send me a reference to support their statement to me, but have not heard from them.
At this point, I would be happy to file through another company like TaxAct or Turbo Tax, but don't want to run into this same problem. I?m basically trying to figure out if this problem is unique to H&R Block or if is an actual IRS requirement. Has anyone heard of the IRS refusing to accept electronic filing in this situation?