Amortizable bond premium refers to the excess amount you’ve paid above the value of a bond. For example, you bought a bond for $1,100 and after the bond matured, it’s worth $1,000. The $100 premium you paid for the bond is considered part of your basis (purchase price). This generally means that each year over the life of the bond, you may choose to use a part of the premium to reduce the amount of interest included in your total income. If you choose to amortize the premium, then you must also reduce your basis in the bond by the amount amortization deducted on your tax return.
Go to this section in Credit Karma Tax: 1099-INT Income
If you received a 1099-INT and have bond premium listed on box 11 and/or 12, enter the total amount of bond premium under Reduction for any amortizable bond premium paid. Don’t reduce the amount of interest income shown in box 1 or box 3 of your 1099-INT by the amount of bond premium.
If you received tax-exempt interest, you’re required to amortize the premium even though it’s not tax deductible. Additionally, each year you must reduce your basis in the bond (and tax-exempt interest if applicable) by the amortization for the year.