using Savings Bonds for college and not paying tax on interest question?
If a person cashes in I or EE saving bonds to pay college tuition, do they not have to pay taxes on the interest earned?
I read that if the bonds were issued to a parent, and they cashed them in for tuition then the parent wouldn’t have to pay tax on interest when filing their tax returns? I tried to ask the Treasury dept. but the person talked in circles.
I can’t tell if the bonds we have can be used this way? And if so – How do we show the money was used for tuition when filing our taxes next year?
Also is there a gross income cutoff for this?
Here is what we have:
I Bonds: shows parent SS# at top. To: child’s name, below that includes “Or Parent name”
EE Bonds: shows child’s SS# at top. To: child’s name, below includes “Or Parent name”
One EE Bond: Parent SS# at top. To: child’s name, and “POD Parent Name”
Terry Says
That provision is still available — but you must follow the rules strictly. Series EE or I bonds must have been purchased after 1980 –and in the name of the PARENT (not the child), and the parent must have been 24 or older…You must You cash the qualifying savings bonds in the same tax year for which you are claiming the exclusion, and you must have paid qualified higher education expenses to an eligible institution that same tax year.
And yes, there is an income limitation, which changes every year. For 2023, your Modified Adjusted Gross Income can not exceed $106,850 or more if single, head of household, or qualifying surviving spouse; or $167,800 or more if married filing jointly.
You must file IRS Form 8815 to take this deduction — and you can read details here.
