US Savings Bonds in Divorce

Negotiate the interest reporting of US savings bonds before the completion of divorce settlement

Many divorce settlements cost divorcees a lot of unnecessary tax dollars because they fail to negotiated the interest on the US savings bonds properly. In many cases, the parties responsible for paying taxes on the US savings bonds they no longer have are not even aware that they have to pay taxes on the Us savings bonds.

If you are awarded US savings bonds in your divorce decree

If you are awarded US sayings bonds in your divorce decree as part of your divorce settlement, be sure to watch out for the followings.

The accrued interest on the US savings bonds that have not been reported as income up to the time of divorce

If half of the US savings bonds are in your former spouse' s name first with you as the co owner of the US savings bonds and the other half of the US savings bonds are in your former spouse's name alone.

Removing your former spouse 's name from the US savings bonds

When you receive the US savings bonds, change the US savings bonds title to your name, removing your former spouse' s name from the US savings bonds altogether.

Claim principal ownership

Then you claim that you were the principal co owner of the US savings bonds even though you were named second on the US savings bonds title and the US savings bonds were retitled without a taxable event.

Taxation of US savings bonds in divorce

The US savings bonds that were in your former spouse's name alone were retitled to your name and a 1099-INT was issued to your former spouse for all the interest earned on thsoe US savings bonds up to the point of the divorce.