How often must taxpayers report interest income from Series I savings bonds?

Taxpayers must report interest income from Series I savings bonds on an annual basis until the bonds reach maturity, unless they choose to report the interest at the time of redemption, meaning when they cash the bonds. This requirement stems from the IRS regulations that state that interest earned on these bonds is considered taxable income in the year it is earned, regardless of whether it is actually paid out to the taxpayer or not.

By reporting this interest annually, taxpayers ensure they are in compliance with tax laws and can accurately represent their income for the year. This reporting allows for a more straightforward approach to tax filings, helping prevent any future complications regarding unreported income when the bonds are eventually redeemed or matured. Thus, option A rightly captures the annual reporting requirement that taxpayers must adhere to.