Savings Bonds and taxation?

Question

I have about 2000 dollars in US Savings bonds. All have matured and a few have begun to collect interest. They have all been in my parents safe deposit box. I would like to cash them out and use them to buy a CD as I plan to move to Tampa, FL from Newark, DE in about 10months. What are the tax penalties against cashing out one's savings bonds? Is there anyway to NOT cash them out, but move them to my own bank account?

Answer 1

U.S. Savings bonds do not have to be cashed to move them. They should just be certificates that have been purchased in your name. When you are ready to cash them in, take them to your financial institution with your ID and cash them in; they are not linked to any particular financial institution.

Also, they have actually been earning interest since they were first purchased. A $50 bond is purchased for $25 and gradually increases in value to the full $50. I believe the interest rate is about 4%. If you keep the bonds as is, you will continue to earn that same rate of interest.

There are no penalties for cashing the bond other than you will have to declare the interest earned on them when you do your taxes. There are some ways to reduce your tax burden when cashing savings bonds. I have given you a link that I found on the University of Washington web site.

You can do it tax free if it is for school and your adjusted income is less than $78,100. I also posted the IRS link below with that information.

Good Luck!

Answer 2

The 1099-INT is real. The $17,000 of interest is going on line 8a of 1040a or 1040. It is going on line 2 of a 1040EZ. you are able to ask the executor in the event that they occurred to incorporate the interest accured by date of dying on the perfect return, yet probability is they did not (almost no person does). in the event that they did not, then the deferred earnings tax is your issue. IRS booklet 550. Inheritance/materials tax is diverse than an earnings tax. those never had the earnings tax paid, so somebody have been given to pay it.