Savings bond interest MUST be reported in year of final maturity!!

Hi Terry In regards to the maturity and taxable interest. NO tax until you cash them in in other words if they mature in 2015 you can delay cashing in till 2017??? Thank you

Terry Says:  I always thought that — that I would wait to cash in my bonds until it was “convenient” — and hopefully when I was in a lower tax bracket.  But that strategy is WRONG!  A recent warning email from www.SavingsBonds.com — a commercial (non-Treasury) website, that specializes in U.S. Savings bond info says:

According to the Internal Revenue Service, publication 550, once a savings bond reaches its final maturity – regardless if the bond has been cashed in – the owner is required to report all of the interest income (unless previously reported annually) on a federal income tax return. Failure to report this income could result in IRS fines and penalties, and possibly interest on those penalties, depending upon how much time has elapsed since the bond(s) stopped earning interest.

Savings bond interest income (if not more than $1,500) should be reported with other interest on the “Interest” line of a tax return in the year the bond was redeemed. For interest amounts over $1,500 a Schedule B (form 1040A or 1040) should be included. Savings bonds are free from state and local taxes.