US Savings Bonds

Posts Tagged ‘ee savings bonds’

What are the interest rates on Series EE Savings Bonds?

How long must I hold a US Savings Bond?

Now that you have some US Savings Bonds, you need to know how to deal with US savings bond tax issues. Interests from United States Savings Bonds are taxed just like other types of investments. However, if you have these US Savings Bonds and decide to cash them out to pay for qualified higher education costs, you may not need to pay Us Savings Bond Taxes. In another word, your interests from US Savings Bonds are tax free.

How to redeem US savings bond tax free?

So, one way to not pay US savings bond tax is to redeem the Savings Bonds for qualified educational purposes. If you cash out your U.S. Savings Bonds to pay for qualified higher educational costs or to rollover the proceeds of the US Savings Bonds to a 529 plan or Coverdell Education Savings Account, you will not need to pay tax on US savings bond interests, provided your modified adjusted gross income (MAGI) is under a certain limit. The good news is that there is no limit to how much you can rollover.

Eligible US Savings Bonds for tax free redemption

Series EE US Savings Bonds qualify for this tax free redemption. See more information on Series EE US Savings Bonds and their tax free rollover. However, A Series EE Savings Bond qualifies if it is issued after 1989. Series I Bonds also qualify for the tax free redemption. Note that Series EE Savings Bonds issued before 1989 and Series E savings bonds do not qualify for this tax free rollover or redemption.

Recap: way to not pay tax on US savings bond interests..

Use the proceed of the redemption of the savings bonds for:

• qualified higher educational costs such as tuition and fees for college, university, vocational school which meet federal financial aid standards.
• funding 529 plans or Coverdell Educational Savings Accounts.

Series EE Savings Bonds are popular US Savings Bonds guaranteed by the government. Series EE Savings Bonds are very safe investments. You can buy electronic series EE Savings Bonds or you can buy the paper series EE Savings Bonds. Electronic series EE Savings Bonds are different from the paper Series EE Bonds.

How much Series EE Bonds can I buy in a year?

You are limited to and cannot exceed buying $5,000 series EE Savings Bonds a year.

Buying electronic series EE Savings Bonds

Electronic series EE Savings Bonds are sold at face value unlike paper series EE Savings Bonds. That means, if you were to buy $50 series EE Savings Bonds, you will pay $50 for each bond. When the electronic series EE Savings Bonds mature, they are worth the face value ($50 in this case). When you buy series EE Savings Bonds, you will see them shown up in your account, you will not receive actual bond certificates for them.

Buying paper series EE Savings Bonds

Paper series EE Savings Bonds are sold at 50% discount, unlike electronic Series EE Bonds. That means, when you buy series EE Savings Bonds, you pay half price. A $50 series EE bond will cost you only $25, making it an attractive and affordable investment for most people. When the series EE Savings Bonds mature, though, you redeem the full face value, not the 50% discounted price you paid.

When you buy paper series EE Savings Bonds, you will be issued the US savings bond certificates that you have to keep well and replaced if lost.