rickwmm wrote:My mother died around 20 years ago and left approximately $15000 to my son, who was only around five years old at the time. My wife and I used the inheritance money to purchase savings bonds for him. Because of his age, we purchased the bond in both my name and my son as co-owners. On the bond, my name is listed first, and then my son's name as co-owner. For reasons which I don't remember now, we put my social security number on the bond. My wife was actually the person who purchased the bonds at the bank. We have never paid any tax on these bonds, which will reach their final maturity in about ten years. My son now has the bonds and will eventually cash them in. The question is...from the IRS perspective, who pays the tax on them? According to what I've read, the IRS says that when a bond is issued in two people's names as co-owners, the person who provided the funds has to pay the tax. In this case, the funds essentially came from my mother's estate from money specifically earmarked for my son, so that would seem to mean he should pay the tax. But since my social security number is on the bonds and since my wife was actually the person who purchased the bonds, I'm wondering if the IRS would think my wife and I (we file a joint return) should pay the tax?
If you used your funds to buy the bond, you must pay the tax on the interest.
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