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Does anyone know if I'm supposed to report and claim as income any interest that accrues on my I Bonds each year or if I just pay tax on it when I sell them?

You actually can make that choice yourself - but once you make the choice you have to stick with it. And you must do the same for all bonds. Generally it is better to wait, but that may not be the case in certain circumstances such as if you expect to be in a much higher tax bracket in later years.

Here is a link to Publication 550, the section on Savings Bonds:

Publication 17 is also a great all-purpose reference. It has a section on Savings Bonds too:
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