While doing my monthly recalculations in October I noticed that we had two US Savings Bonds that had matured earlier in the year.
I hightailed it up to the bank to cash them out. Since they had reached their last maturity date it made no point to keep them "invested" as they'd earn nothing more.
I had hoped to apply these to College Boy's next tuition bill in January so that the interest they have earned would not be taxed.
Unfortunately per the rules for these things, only US Savings Bonds purchased after 1989 can be used in this way without a tax penalty.
These bonds were purchased in 1986.
Darn it!
When Hubs first started at his career his employer offered among other perks an automatic payroll deduction to buy US Savings Bonds. Of course we signed up for that along with all the other savings plans they offered. Somewhere in 2006 the employer discontinued this Saving Bond purchase plan, but along the way we ended up with 51 Savings Bonds.
I have our Bonds saved in a spreadsheet online that I can update values every month from the Us Treasury website database.
We have another Bond maturing Dec 1st and will also cash that one out before the end of the year.
We are debating cashing in some of these bonds early(before full maturity)as the rate is 1.3% or 1.4% and these are dated such that can be used for education tax-free. Is it better to use them now for education expenses or hang onto them to cash in after Hubs retires and our income is lower.
It probably doesn't matter much to our bottom line since the amount of money is comparably small potatoes.
I just can't believe that we've had these things for 30 years!
Suddenly I feel so old...... ;-)
Sluggy
Oldest daughter is 43. We purchased savings bonds for her and gave them to her when she wanted a new bedroom set. She handled the transaction. Youngest daughter got several when her dad died and she cashed them in for living expenses in college. No more savings bonds here.
ReplyDeleteDS is are long cashed in, but DD1 has quite a few and I think DH has some. Those are probably 50+ years old. Great reminder. I think we have minimal for DD2 because then the college savings accounts started and folks put in those instead of bonds, not that there is much there either.
ReplyDeleteI had a similar plan at my work place. Though mine are I Bonds, not EE. They are still collecting interest. Haven't decided whether to use them for education or not. Would like to but I belong to a Credit Union now, and the probably won't cash them. How do you use them for tuition to not get taxed? Does the bank handle that part?
ReplyDeleteMy girls also have some bonds and stocks from birth and subsequent birthdays. Holding on to those until after they graduate so the can buy their first car or first place or what ever they need it for.
Yours,
DeeCee
Rules on using Savings Bonds for education are here-- https://www.treasurydirect.gov/forms/savpdp0051.pdf
DeleteIf your financial institution won't cash them, you can send them to the Treasury Dept. I don't believe you can cash Series I bonds at a bank/cu anymore, they have to be redeemed by mail or electronically.
The interest earned on Series EE and I bonds are tax exempt if used for educational cost(tuition, fees)if the bond is in the taxpayer's name(and/or spouse), it was purchased after 1989 and the taxpayer was at least 24 years old at the time of it's purchase. Bonds taken out in a child's name do NOT qualify for this perk. There are also adjusted gross income limits associated with this....if you make over $X amount per year you can't claim this deduction.
When you cash in a bond at a bank/cu they should send you a 1099-INT so you can file the reported interest on your taxes. Savings Bond interest is NOT however taxed at the state and/or local level, just federal.
Hope this helps.
We have bonds also, can't find them, long story. But they also make me feel older.
ReplyDelete