US Savings Bonds

Archive for the ‘Taxes on Savings Bonds’ Category

Question: Scholarship Tax?

I have read in the IRS website and in other information that I have recieved that if you have been awarded a scholarship it is taxable if you use it for more than just tuition and fees. I have a scholarship that I was planning on using for some of my room and board. Is the scholarship suject to state taxes? And are there any educational savings accounts/bonds that I could put the extra scholarship money that would allow it to be exempt for federal/state tax? (I will be working this summer so my income will already exceed the standard deduction and personal exemption at the federal level)
The most important question is: is this suject to state tax, and if so, which state my resident state– My resident state or the one where I will be going to school.

Answer: Your most important question is able to be answered parallel to whether you should start an educational saving account:

You should weigh starting a business after you get out of school. If your mind is made up to work for someone else after you graduate, an educational savings account is one option if you plan to get married and feel you will not be able to send your children to college without some sort of “forced savings”.

If you provide over 50% of your support, the IRS will allow you to knock 3450 off of your gross income for 2008. You will also be able to take 5550 if you do not itemize your deductions. that may be enough to knock your gross income down to zero or nearly zero.

The scholarship money may be used for tuition and fees, room and board, valid lab fees and a few other charges. If you use any of the money for other things, you will have to add it to income. The scholarship will be subject to state income tax as state income tax begins with your Federal adjusted gross income {FAGI}. New Hampshire and Tennessee are the only exceptions {long story}.

All states have standard deduction, itemized deductions and exemptions. Your state income tax liability will be less than the Federal in your situation.

If both states have income tax, you will most likely have tax withheld by the state that you work in, unless you drive from your home state to work in another state on your summer job. In the unlikely event that two states withhold tax from you when you work at school, you will be able to get full credit from the state in which the university is not in. California is the only exception I know of.

Bond Investing : How Do Tax-Exempt Bonds Work?

Question: Financial Planning Questions?

I have some questions that I want t double check that they are right, can anyone help?
1.Market Risk, inflation, taxes are major factors that affect an investment’s rate of return. True?
2.Both comon stock and corporate bonds have performed well in times of inflation. False?
3.If one is in the 25 percent marginal tax bracket, he will have an after-tax income of ___ from an investment that pays $1500 in taxable income. Can anyone tell me how to accomplish this?
4.The returns on common stocks have been half as high as the returns on cash savings.False?
5.Growth companies typically pay little or no cash dividends.False?
6. Most bonds are callable. True?
7. The fundamental approach presumes that current and future earnings, trends, industry outlook, managements expertise determine a stock’ price movement. True?
8.If your time horizon is 6 to 10 years an your portfolio conists of 10% cash, 30% bonds & 60% stocks, you would be considered to have a(n) ___ investment philosophy.

Answer: 1. true
2. false
3. 1125?
4.false
5.false
6. true
7. true
8. that i dont know sorry

Dion Gouws CPA Diego La Jolla Tax preparation Office.3gp

Question: Interest is exempt from federal income taxation on:?

a-equipment trust certificates
b-zero coupon bonds
c-federal bonds such as Savings Bonds
d-state of Florida bonds

Answer: d

Federal income tax is not levied on state bonds.

State income tax is not levied on federal bonds.

Savvy Rules for 401k Investing