PSA: Check your US Savings Bonds!!!

[迪士尼乐园]

Somehow the topic of savings bonds came up the other day and my daughter asked what hers were worth. I just got them out of the lock box and we looked them up. All of hers are still earning either 1.02% or 1.30% interest so she'll probably just keep them for now.

But I also found an old bond of my wife's in there. It was issued in 1985, so 35 years ago. Bonds fully mature in 30 years and stop earning interest. So for the past 5 years, this money has earned nothing.

We need to go to the bank this week to get a Signature Guarantee for another transaction. While we're there, we'll cash in the bond. It's worth $115 so not a ton of money but at least we can move it into an account that is earning something.

[点赞计划]

Somehow the topic of savings bonds came up the other day and my daughter asked what hers were worth. I just got them out of the lock box and we looked them up. All of hers are still earning either 1.02% or 1.30% interest so she'll probably just keep them for now.

But I also found an old bond of my wife's in there. It was issued in 1985, so 35 years ago. Bonds fully mature in 30 years and stop earning interest. So for the past 5 years, this money has earned nothing.

We need to go to the bank this week to get a Signature Guarantee for another transaction. While we're there, we'll cash in the bond. It's worth $115 so not a ton of money but at least we can move it into an account that is earning something.

Yikes! It's not a great deal of money, but technically the taxes are due at maturity (2015 tax year).

"When must I report the interest on my tax form?
You have a choice. You can

• report the interest every year
• put off (defer) reporting the interest until you file a federal income tax return for the year in which the first of these events occurs:
  • you redeem (cash in) the bond and receive what the bond is worth, including the interest, or
  • you give up ownership of the bond and the bond is reissued, or
  • the bonds stops earning interest because it has reached final maturity"

//www.treasurydirect.gov/indiv...axconsider.htm

[尤卢克]

$115. Get it in cash and she can spend that on something for herself.

[迪士尼乐园]

Yikes! It's not a great deal of money, but technically the taxes are due at maturity (2015 tax year).

Interesting. I guess that makes sense as the government wants their share. I guess our CPA will have to figure it out next year when we do our 2021 taxes.

[迪士尼乐园]

$115. Get it in cash and she can spend that on something for herself.

Well it is actually her money. She got the bond as an engagement gift when she was going to marry another guy years before we got back together.

[kork13]

Well it is actually her money. She got the bond as an engagement gift when she was going to marry another guy years before we got back together.

All the more reason to get the thing sold & gone. Lol

[储蓄雄鹿]

Disneysteve -- THANK YOU so much for the reminder about this! I have not paid attention to the bonds that I have gotten over the years for my kids. Unfortunately, I have 4 bonds that stopped earning interest in 2019. I am assuming that I cash ASAP and file an amended return. I have some that reached maturity in 2020 as well. I assuming that I cash those now and claim on my 2020 taxes........ To refresh my memory -- I think bonds earn interest once a year these days so any I cash out in the future should be on or right after the date (my bonds say dating stamp). Both my children are in college right now --- one finishing in May with BS degrees and the other in December with an MPA. I do have a few for my son in his name and SS that he can use for educational purposes. I went on the 网站 and it indicates that one has to be 24 when the bond was purchased in order to exclude the interest.

[点赞计划]

Disneysteve -- THANK YOU so much for the reminder about this! I have not paid attention to the bonds that I have gotten over the years for my kids. Unfortunately, I have 4 bonds that stopped earning interest in 2019. I am assuming that I cash ASAP and file an amended return. I have some that reached maturity in 2020 as well. I assuming that I cash those now and claim on my 2020 taxes........ To refresh my memory -- I think bonds earn interest once a year these days so any I cash out in the future should be on or right after the date (my bonds say dating stamp). Both my children are in college right now --- one finishing in May with BS degrees and the other in December with an MPA. I do have a few for my son in his name and SS that he can use for educational purposes. I went on the 网站 and it indicates that one has to be 24 when the bond was purchased in order to exclude the interest.

Those old bonds would earn interest on 6 month increments.

In order to use savings bonds for education you have to meet certain requirements.
Who Can Take the Exclusion
You can take the exclusion if all five of the following apply:

• You cashed qualified U.S. savings bonds in the same tax year for which you are claiming the exclusion.
• You paid qualified higher education expenses in that same tax year for yourself, your spouse, or your dependents.
• Your filing status is any status except married filing separately.
• Your modified adjusted gross income was less than the cut-off amount set by the Internal Revenue Service. This amount typically changes every year. See IRS Form 8815 for the current amount.
• You were 24 or older before your savings bonds were issued.

Savings Bonds That Qualify for the Exclusion
To qualify for the exclusion, the bonds must be Series EE or Series I savings bonds issued after 1989 in your name, or, if you are married, they may be issued in your name and your spouse's name. 没有 te: A bond bought by a parent and issued in the name of his or her child under age 24 does not qualify for the exclusion by the parent or the child.

//www.treasurydirect.gov/indiv..._education.htm

But, I was reading something interesting the other day regarding the bonds being issued in the child's name--so there might be something to be done for that:

Question:I just realized that the paper savings bonds for our children's education are in the wrong names—theirs, not ours. As I understand it, this would not qualify for the interest exclusion. Can I change the names?

Answer:You can change the names as long as the funds used to buy the bonds didn't belong to your children and the bonds are dated January 1990 or later. If Series I or Series EE bonds purchased January 1990 or later were bought to qualify for the Education Savings Bond Program, but were improperly registered when they were issued, the bonds may be reissued to qualify for the program. The purchaser would need to complete a FS Form 4000 to get the bonds reissued.

//www.treasurydirect.gov/forms/savpdp0051.pdf

Finally, there is one more thing you could do if you otherwise qualify to exclude the interest (for future college expenses) --transfer the savings bonds proceeds to a 529 account.

//www.savingforcollege.com/art...nto-a-529-plan

(I read about someone who is planning to do this for their grandchildren--they plan to open the 529 plan as owner and beneficiary and then change the beneficiary when the appropriate time comes--of course there are gift tax considerations at that time).

[点赞计划]

As much as I dislike the Treasury Direct web site, I will say one positive is they send an email whenever a savings bond has matured and is no longer earning any interest.
At maturity the savings bond gets turned into a Zero-Percent Certificate of Indebtedness (C of I) (earning no interest) and the proceeds can be used to buy more bonds or transferred over to my bank account.

[迪士尼乐园]

Disneysteve -- THANK YOU so much for the reminder about this! I have not paid attention to the bonds that I have gotten over the years for my kids. Unfortunately, I have 4 bonds that stopped earning interest in 2019.

I'm glad my personal screw up helped someone else.

[bjl584]

Somehow the topic of savings bonds came up the other day and my daughter asked what hers were worth. I just got them out of the lock box and we looked them up. All of hers are still earning either 1.02% or 1.30% interest so she'll probably just keep them for now.

But I also found an old bond of my wife's in there. It was issued in 1985, so 35 years ago. Bonds fully mature in 30 years and stop earning interest. So for the past 5 years, this money has earned nothing.

We need to go to the bank this week to get a Signature Guarantee for another transaction. While we're there, we'll cash in the bond. It's worth $115 so not a ton of money but at least we can move it into an account that is earning something.

Hmmm.
I have some bonds from when I was born.
I'm 42, so they aren't earning anything now either.
Time to get those out of the safe I guess.

[迪士尼乐园]

Hmmm.
I have some bonds from when I was born.
I'm 42, so they aren't earning anything now either.
Time to get those out of the safe I guess.

Yep. Yours stopped earning interest 12 years ago unfortunately.

[bjl584]

Yep. Yours stopped earning interest 12 years ago unfortunately.

Fortunately there aren't a lot of them, so the "loss" is pretty minimal.

[节约]

Hey 迪士尼乐园 let me know if you can cash them at a bank? I think that might've changed in Summer of '20, that's what my bank said when I called them up a few weeks ago to ask. Said I had to do it through the Treasury 网站 .

I bought EE Bonds in the 90's through a work payroll deduction program. Thought I was going to cash them out to pay my son's last year of college but when I saw that the interest on some of them was 4% I decided I'm going to wait till they get 30 years and stop earning. My first one will be at 30 years 9/21, I'll just cash them in a little at a time when the interest stops accruing.

Would love to just take to a bank or credit union and not deal with the Treasury site, so let me know what you find out.

[迪士尼乐园]

Hey 迪士尼乐园 let me know if you can cash them at a bank?.

According to treasurydirect.gov you can. "You can cash paper EE and E bonds at most local financial institutions. This is the easiest way to cash bonds and the quickest way to get access to your money."

I'll let you know how it goes. We'll either go tomorrow or Wednesday.