SAVINGS BONDS
I have 2 savings bonds that are going stop collecting interest in 2022. They are $5,000 each of which I paid $2,500 for and are getting 4% interest. I was told by my tax preparer that I should cash them in, one this year and one next year so that they don’t put me in another tax bracket. was also told that I am going to have to pay interest on the difference between $2,500 to the $8,176 that they are worth in 2022. Can you tell me how much interest I am going to have to report on my income tax.
Terry Says
Good advice from your tax preparer, who is watching out for your tax brackets. Just carefully check the maturity dates, and don’t cash them in before maturity so you don’t lose out on your interest.
The government will send you a 1099 with the reportable interest on the bond you cash in. You’ll add that to your other income, and it will be taxed at your marginal bracket. So don’t spend it all! And there is no state income tax on the savings bond earnings.
