If you turn 24 on june 18, 2009, and you purchase a bond on. Interest is added to an ee bond monthly and paid when you cash the bond. Series i bonds allow you to turn your cash into an investment thats safe from inflation while you earn interest from the government. If a financial institution pays the bond, you will receive a paper 1099int from that financial. These savings bonds can earn interest for up to 30 years. Nov 05, 2019 before the advent of series ee bonds, your grandparents might have bought you a series e savings bond. How to report the sale of us savings bond to the irs. Savings bonds calculator series ee savings bonds faq bankrate. About form 8815, exclusion of interest from series ee and. Savings bonds issued after 1989 form 8888 allocation of refund including savings bond purchases. Form 8815 exclusion of interest from series ee and series i u. Series ee savings bonds often called ee bonds are government savings bonds issued by the u. If you turn 24 on june 18, 2009, and you purchase a bond on june 19, 2009 so you really and truly are 24 years old, the issue date is.
How to report us savings bond series ee interest, without. How to transfer a series ee bond to a new owner budgeting money. Savings bonds, specifically ee e series bonds, were created as a longterm investment allowing individuals to save in a reliable, lowrisk fashion. The agency provides a form you can use to initiate the process and makes it available online or by mail. The government tinkered with the interest rate formula, making them far less attractive as an investment by fixing rates for the life of the bond.
The secret feature of series ee savings bonds wealth. Savings bonds have long been a popular gift for children as a means of helping college savings. These securities are only available from original issue not through the commercial market. Find out what your savings bonds are worth with our online calculator. Form 8818 is used by individuals who cashed certain savings bonds and paid qualified higher education expenses to keep a record of the bonds. Your investment is not subject to fluctuating interest rates or stock values. To qualify for the exclusion, the bonds must be series ee or i u. Series ee savings bonds issued in the 1980s and early 1990s have an original maturity of 20 years, and an extended maturity of 10 years, for a total of. Savings bonds series ee and series i are available for purchase at any time. I cashed some series e, series ee, and series i savings bonds.
Form 8815, exclusion of interest from series ee and i u. You will need the information on this form to complete form 8815, exclusion of interest from. Savings bonds calculator series ee savings bonds faq. The bond must be issued either in your name sole owner or in your and your spouses names coowners. Internal revenue code section 454 allows an election to report the accumulated income from savings bonds on the owners income tax return. Information about form 8815, exclusion of interest from series ee and i u. Internal revenue service irs office of the comptroller of. But a littleknown twist can make that rate a whole lot better. To save for college taxfree using either series ee or series i savings bonds, the owner needs to be at least 24 years old on the first day of the month when the bond is issued.
Unlike ee bonds, however, i bonds are issued at face value. Jul 02, 2019 find out what your savings bonds are worth with our online calculator. When electronic ee bonds in a treasurydirect account stop earning interest, they are automatically redeemed and the interest earned is reported to the irs. About form 8818, optional form to record redemption of. Savings bonds bought through treasurydirect are electronic. The interest earned is determined by an interest rate that has been fixed since may 2005. Series ee bonds, sometimes called patriot bonds after 2001, differ from series i because they are guaranteed to double in value after 20 years.
Find out the tax implications of cashing in savings bonds for education. The interest accrued on these bonds when we cashed them in last year should be reported under her mothers final tax return yet the 1099 we received from the bank has my wifes ssn on it because she cashed them in. Form 8815 exclusion of interest from series ee and i u. Treasury committed that such bonds would at least double in value in 20 years some doubled within 17 or 18 years.
Series ee savings bonds are lowrisk savings products that pay interest until they reach 30 years or you cash them, whichever comes first. Penalty for a savings bond past final maturity budgeting. First issued in 1980 as a replacement for the series e savings bonds, they have been offered ever since, though the rules applying to the bonds have changed several times. Jan 03, 2020 form 8815, exclusion of interest from series ee and i u. If you elect cashbased reporting on your income tax filings with the irs, you can defer payment of taxes on the interest income of your series ee savings bonds until you redeem the bond or 30 years from the date it is issued. One parent wonders if she can cash in some series ee savings bonds and put them into a 529 plan.
Ee bonds purchased between may 1997 and april 30, 2005, earn a variable rate of interest. Series e bonds bought between may 1941 and november 1965 mature in 40 years, but if you bought the same type of bond between december 1965 and june 1980, it would mature in 30 years. The cost of a paper ee savings bond is onehalf the face amount. Additionally, the treasury formerly offered series hh bonds, which were current income bonds.
Historical and future information also are available. Can i cash in series ee savings bonds to fund 529 plan. If you hold these bonds after the date of final maturity, it opens the door to a possible tax penalty andor fine for you. Savings bonds, specifically eee series bonds, were created as a longterm investment allowing individuals to save in a reliable, lowrisk fashion. Options to redeem savings bonds without paying tax on the interest. How to cash in series ee savings bonds depositaccounts. Ee bonds are guaranteed to reach their maturity at face value within 20 years, which means the minimum effective pretax annual rate of return is slightly more than 3. The executorpersonal representative of your fathers estate can make that election on behalf of your father, per revenue ruling 68145. Not cashing savings bonds to avoid taxes savings the. The difference between the purchase price and the redemption value is taxable interest income. For income tax purposes, interest on ee bonds and i bonds is added to the initial value until the bonds are redeemed. Savings bond holders have a choice of when to pay that tax. How to avoid paying taxes on savings bonds the balance. The annual interest rate for series ee savings bonds is currently a paltry 0.
Series ee bonds issued may 2005 and after earn a fixed rate of interest. Features include current interest rate, next accrual date, final maturity date, and yeartodate interest earned. You owe taxes on matured savings bonds which brings us to irs publication 550 investment income that, my friends, is an authoritative source and a popular, but dead wrong taxsavings strategy. Who pays federal income taxes on inherited series ee. Then, when the bond matures, you get the bond amount plus the accrued interest. About form 8815, exclusion of interest from series ee and i u.
When buying a series i or electronic series ee bond, you pay the face value of the bond. Series ee bonds are the most common type of bonds issued by the u. Both products, since theyre electronic, can be transferred to another treasurydirect account. How to report us savings bond series ee interest, without 1099int form. Oct 29, 2019 series ee savings bonds can defer income taxes until redemption or 30 years.
Apr 02, 2019 the interest exclusion applies to series ee savings bonds issued in 1990 or a later year and all series i savings bonds. You can report interest income from series e, ee, and i bonds in one of these ways. The series ee bonds grow their value with interest. The difference between the purchase price of the bond and the redemption value of the bond is subject to federal income tax and exempt from state and local tax. Is savings bond interest reported as capital gains or income. Series ee savings bonds can defer income taxes until redemption or 30 years. Requirements for using savings bonds for college expenses. Electronic ee bonds are purchased through the treasury direct website and. The calculator will price series ee, series e, and series i savings bonds, and savings notes. Individual series eee savings bonds tax considerations. Enter the 1099int into schedule b, including the interest on us savings bonds on the appropriate line. Unlike series ee and i bonds, they did not increase in value, but paid earned interest. Learn more about taxing interest on savings bonds and education savings bond.
Sep 01, 2015 for income tax purposes, interest on ee bonds and i bonds is added to the initial value until the bonds are redeemed. Revenue service irs offers choices for how you redeem your bonds and pay tax on. While these bonds may not always provide much in the way of growth the current interest rate for series ee bonds is a paltry 0. Mar 26, 2019 when electronic ee bonds in a treasurydirect account stop earning interest, they are automatically redeemed and the interest earned is reported to the irs.
Apr 10, 2020 the irs lets you avoid paying taxes on interest earned by series ee and series i savings bonds when you redeem them if you use the money toward qualified higher education costs for yourself, your spouse, or any of your dependents. Irs publication 550 states that once that savings bond passes its final maturity date, the interest accumulated over the life of the bond must be reported on that years federal tax return. The taxpayer can exclude interest income from series ee and series i us savings bonds if all of the following are true. The us treasury produces two types of savings bonds. Savings bonds issued after 1989 form 8818 optional form to record redemption of series ee and i u. Tax advantages of series ee savings bonds the balance.
Savings bonds issued after 1989, including recent updates, related forms, and instructions on how to file. Of course, doing this comes with a number of qualifying rules. Use form 8815 to figure the amount of any interest you may exclude. Is savings bond interest reported as capital gains or. Both e and ee bonds are discount bonds and redeemable before or at final maturity at increasing redemption values. If you wish to give your series ee bonds as a gift, you can have the u. Savings bonds earn interest for 18 to 30 years after the issue date.
What you must know about taxation of ee series bonds ed. Series e bonds were issued from may 1, 1941 until dec. If a financial institution pays the bond, you will receive a paper 1099int from that financial institution either soon after you redeem. You must be at least 24 years old before the bonds issue date. Those were issued from 1941 to 1980, and all of them have stopped earning interest, too. The irs lets you avoid paying taxes on interest earned by series ee and series i savings bonds when you redeem them if you use the money toward qualified higher education costs for yourself, your spouse, or any of your dependents. Series i savings bonds are an excellent option for new investors because they are lowrisk. Form 8815 exclusion of interest from series ee and. Savings bonds issued after 1989 frequently asked questions faq interest, dividends, other types of income. Select the enrollee the individual on the return with qualified education expenses and enter the educational institution. Bonds are issued by month and their maturity dates depend on the type of bond you have and when you purchased it. Series ee savings bonds issued in the 1980s and early 1990s have an original maturity of 20 years, and an extended maturity of 10 years, for a total of 30 years until the final maturity of the bonds. This type of savings bond is supported by the united states treasury and using irs form 8888. A bond bought by a parent and issued in the name of his or her child under age.
Now you may only obtain series ee bonds by purchasing them electronically at treasurydirect. Use this form to keep a record of the post1989 series ee and i bonds you cash. The secret feature of series ee savings bonds wealth management. Mar 29, 2019 the us treasury produces two types of savings bonds. Department of the treasury reissue them in the name of your beneficiary. The series ee bond is a nonmarketable, interestbearing u. Rates for ee bonds depend on the issue date and are either a fixed rate of return or a variable rate based on 90% of 6month averages of 5year treasury securities yields, while rates for i bonds are calculated by combining fixed rates of return and semiannual inflation rates based on the cpiu. Also, you must have been age 24 or older before the bonds were issued. Before the advent of series ee bonds, your grandparents might have bought you a series e savings bond. The interest earned on series ee us savings bonds issued after december 31, 1989 and all series i bonds may be tax free when the bonds are redeemed to pay for qualified higher education expenses or rolled over into section 529 college savings plans, prepaid tuition plans or coverdell education savings accounts. If series ee or series i bonds are cashed in to pay for qualifying highereducation costs. You must be at least 24 years old before the bond s issue date.