Question about Savings Bonds

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StraightEdge
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Question about Savings Bonds

Post by StraightEdge » Fri Apr 13, 2018 7:11 pm

When I was a kid, my uncle gave me several savings bonds over the course of my life. He bought them and they are in my name. Specifically they are Patriot Bonds and they say EE Series on them. I'm just going to take the oldest one here that I have for questions I have on them. The denomination is $50, the issue price is $25, the interest right now on it is $27.10, value of it right now is $52.10 and the final maturity of it is 5/2028.

1.) So is what he paid for this example, $25? Is that what issue price means? Then what does the $50 denomination represent...like what does that $50 mean? Just an amount that the bond can at least get to with interest included?

2.) From my understanding, you have to report these on taxes for the calendar year depending on if you cash it or when final maturity hits, whichever happens first, correct? If that's so, and you let maturity hit first and you don't go to cash it for a while...how does the bank or government know where to contact you and send your 1099 that reports it? Because I got all these as a kid and my address has changed a lot? I've never anyone regarding these my contact info to my knowledge? I understand that if you cash it first before maturity hits, then you would probably just give some information at the bank on where to send your 1099 that reports it or they just give you the 1099 there at the counter? But what if you let maturity hit first and you don't go to cash it for a while and you need to report it?

3.) Which part do you report on taxes? Again use my example and for this question let's say the final maturity is right now instead of 5/2028. Do you only report the interest amount of $27.10 on your taxes? Why not the whole value of it when the maturity is done so in this case $52.10? Because the whole $52.10 amount is income and not just the interest of $27.10?

Gill
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Re: Question about Savings Bonds

Post by Gill » Fri Apr 13, 2018 7:27 pm

The $50 is the value at the original maturity date. When the bond is redeemed you exclude the original cost in reporting the interest on the bond. If you ignore final maturity, you won’t receive a 1099 by the IRS says you still should have reported the interest in that year.
Gill

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KlingKlang
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Re: Question about Savings Bonds

Post by KlingKlang » Fri Apr 13, 2018 7:39 pm

1.) The $50 printed on the bond is basically a marketing gimmick by Uncle Sam, it just makes it look like you were given a bigger gift than you were. The official answer is that each EE bond has a guaranteed doubling period (currently 20 years, shorter for older bonds) so that is double the $25 purchase price for the math challenged.

2.) Your bank will record your SS number and current address when you redeem the bond and send you a 1099 at the beginning of the next year. If you continue to hold the bond after maturity (silly since it earns no more interest) then you are legally required to look up the interest yourself and report it for the year that the bond matured. If you forget to do this the bank will send you a 1099 for the year that the bond was redeemed and its up to you to square it with the IRS. Just typing a short explanation on Schedule B should do it.

3.) The $27.10 interest is taxable income and reported on Schedule B. The original $25.00 purchase price was a gift to you and is not taxable.

Mydanyale
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Re: Question about Savings Bonds

Post by Mydanyale » Fri Apr 13, 2018 9:04 pm

Minimum term of ownership: 1 year
Interest-earning period: 30 years
Early redemption penalties:
Before 5 years, forfeit interest from previous 3 months
After 5 years, no penalty

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EyeYield
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Re: Question about Savings Bonds

Post by EyeYield » Fri Apr 13, 2018 10:29 pm

KlingKlang wrote:
Fri Apr 13, 2018 7:39 pm
1.) The $50 printed on the bond is basically a marketing gimmick by Uncle Sam, it just makes it look like you were given a bigger gift than you were. The official answer is that each EE bond has a guaranteed doubling period (currently 20 years, shorter for older bonds) so that is double the $25 purchase price for the math challenged.

2.) Your bank will record your SS number and current address when you redeem the bond and send you a 1099 at the beginning of the next year. If you continue to hold the bond after maturity (silly since it earns no more interest) then you are legally required to look up the interest yourself and report it for the year that the bond matured. If you forget to do this the bank will send you a 1099 for the year that the bond was redeemed and its up to you to square it with the IRS. Just typing a short explanation on Schedule B should do it.

3.) The $27.10 interest is taxable income and reported on Schedule B. The original $25.00 purchase price was a gift to you and is not taxable.
Correct.

Not all banks are the same when it comes to EE bonds, some bank employees have never seen a paper bond and might not know the proper protocol.
If they don’t, you can show them this : https://www.treasurydirect.gov/forms/sav0022.pdf

Some may balk at your incorrect address, but EE bonds don't need to be reissued to correct the address that appears on the bonds. If you’re not a familiar face at your bank they may have you fill out some paperwork or simply say that they don’t cash them. I think that most major banks cash them, but I don’t know if they are under a mandate from the treasury.

I do business with two major banks and one, Chase, will cash as many as I want, so every December I can bring all bonds that matured that year and cash them all at once. My BoA branch will only cash 7 at a time - paranoid about fakes according to the one person who handles EE bonds at my BoA.

It’s good to call ahead and get your branch’s policy.

I’m sure you have this: https://www.treasurydirect.gov/BC/SBCPrice
... but just in case.
"The stock market is a giant distraction from the business of investing." - Jack Bogle

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Earl Lemongrab
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Re: Question about Savings Bonds

Post by Earl Lemongrab » Sun Apr 15, 2018 12:45 pm

When I joined Megacorp, they had someone come around to discuss payroll savings and such, so I had two dollars per week going in. I'd get four $50 bonds each year. Those started reaching final maturity some years back, so I've been taking the year's haul to the bank in December. The US Bank tellers usually don't have much problem cashing them.

One nice thing about USB is that they have some branches in local supermarkets, which have extended hours including some on Sunday. I got a batch cashed at one of those once. I could see the teller study them for a long time, then go get the proper stamp. Then stare at them a bit more. I could almost hear the thoughts, "Ok Heather, you know how to do this. Let's go." She got it done, and I got my money.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

StraightEdge
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Re: Question about Savings Bonds

Post by StraightEdge » Mon Apr 16, 2018 10:41 am

KlingKlang wrote:
Fri Apr 13, 2018 7:39 pm
1.) The $50 printed on the bond is basically a marketing gimmick by Uncle Sam, it just makes it look like you were given a bigger gift than you were. The official answer is that each EE bond has a guaranteed doubling period (currently 20 years, shorter for older bonds) so that is double the $25 purchase price for the math challenged.

2.) Your bank will record your SS number and current address when you redeem the bond and send you a 1099 at the beginning of the next year. If you continue to hold the bond after maturity (silly since it earns no more interest) then you are legally required to look up the interest yourself and report it for the year that the bond matured. If you forget to do this the bank will send you a 1099 for the year that the bond was redeemed and its up to you to square it with the IRS. Just typing a short explanation on Schedule B should do it.

3.) The $27.10 interest is taxable income and reported on Schedule B. The original $25.00 purchase price was a gift to you and is not taxable.
Thanks for the answers, this helps.

1.) Regarding #2 though, I still need a little help understanding. What happens if you cash a bond before final maturity, will the bank just send you a 1099 at the beginning of the next year and you only need to record the interest for the year you cashed it and then you're done right?

2.) Or let's say you cash it in the final year maturity hits but what if your address changes between the time of the date you gave to the bank and when they send the 1099-INT in the early part of next year?

3.) I'm still a little confused about if you don't cash the bond on the year it matured. Let's say in this example, I don't cash it in 2028 when the interest matures and I cash it in 2029. But let's say I report the interest earned on my 2028 tax return like I'm supposed to even though I didn't receive a 1099. Will the bank still send you a 1099 in early 2030 about you cashing it in 2029? Because if so, that's confusing because you have already reported it for 2028 and then what do you do with that 1099 they sent? Or does the bank not send you a 1099 in early 2030 because they know you reported it on your taxes in 2028 even though you hadn't cashed it yet?

4.) Or let's say you forget to cash it in 2028 when it finally matures and you also forget to report the interest in 2028. And let's say you cash it in 2029. You said the bank will then send you a 1099 in early 2030 showing that you cashed it in 2029. Can you not report the interest then for 2029 or would you get in trouble since it actually happened in 2028? Or would just reporting the interest on your 2029 tax return work fine as long as you provided an explanation that you are reporting it in 2029 even though it matured in 2028? Would that be enough and you wouldn't get in trouble?

5.) Why do you have to report the interest on Schedule B? Isn't there just a spot on the 1040 that's like line 2 or something that asks for interest income? Why can't you just put it there where it's supposed to go? Like why also do you have to report it on this Schedule B too?


It sucks because I literally have like 10-15 of these bonds that was given to me so each maturity date for interest is like one year apart. That means each year I'm going to have to cash it and have to report the 1099-INT for like 10 years straight lol.

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Earl Lemongrab
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Re: Question about Savings Bonds

Post by Earl Lemongrab » Mon Apr 16, 2018 11:12 am

That's one of those, "that's not the way the law is but the IRS is likely never going to know" situations. All they have to go on is the 1099 and those don't say anything about what the final maturity date was on the bonds. Just the total interest accumulated.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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KlingKlang
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Re: Question about Savings Bonds

Post by KlingKlang » Mon Apr 16, 2018 12:26 pm

StraightEdge wrote:
Mon Apr 16, 2018 10:41 am
5.) Why do you have to report the interest on Schedule B? Isn't there just a spot on the 1040 that's like line 2 or something that asks for interest income? Why can't you just put it there where it's supposed to go? Like why also do you have to report it on this Schedule B too?

It sucks because I literally have like 10-15 of these bonds that was given to me so each maturity date for interest is like one year apart. That means each year I'm going to have to cash it and have to report the 1099-INT for like 10 years straight lol.
Use Schedule B (Form 1040A or 1040) if any of the following applies.
• You had over $1,500 of taxable interest or ordinary dividends.
• You received interest from a seller-financed mortgage and the buyer used the property as a personal residence.
• You have accrued interest from a bond.
• You are reporting original issue discount (OID) of less than the amount shown on Form 1099-OID.
• You are reporting interest income of less than the amount shown on a Form 1099 due to amortizable bond premium.
• You are claiming the exclusion of interest from series EE or I U.S. savings bonds issued after 1989.
• You received interest or ordinary dividends as a nominee.
• You had a financial interest in, or signature authority over, a financial account in a foreign country or you received a distribution from, or were a grantor of, or transferor to, a foreign trust.

You are correct that if none of the above apply you can just enter the total of your 1099-INTs on line 8a. This is what you do when the year that you redeem your savings bond and the 1099 match. I've been filing Schedule B for the last 50 years so I just refer to it automatically.

If a bond matures, you don't redeem it, and you remember to look up the interest you should enter a line on Schedule B that reads 'Accrued interest on US Savings Bond' and the positive interest value. The year that you do redeem it you enter two lines on Schedule B: 'Interest on US Savings Bond' and the positive interest value (so that the IRS has something to match your 1099 to); and 'Interest on US Savings Bond previously reported' and the negative interest value. The two values cancel each other out so you don't pay tax on the bond again.

If a bond matures, you don't redeem it, and you forget to look up the interest you can just take Earl Lemongrab's advice (the moderators yell at me when I say that) and enter the total of your 1099-INTs on line 8a the year that you do redeem it, or to be scrupulously honest you enter on Schedule B: 'Interest on US Savings Bond which matured in 20xx' and the positive interest value.

I've got over 600 savings bonds and another 26 years to go so I have you beat there.

rgs92
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Re: Question about Savings Bonds

Post by rgs92 » Mon Apr 16, 2018 12:35 pm

First, I think the best thing to do is put them all in a Treasury Direct account to avoid holding any paper securities.
(This was some advice up above in this thread.)
Then you will see exactly what you have and have the option to redeem them, send the proceeds to your bank account, put them in another type of treasury security, whatever. And you will see all the current values. So definitely do this right away if it's more than just a few bonds.

Go to the treasury direct site, open an account, read the instructions, and ask here if you have questions about the process after this research.
Good luck.
TD can be a little confusing, but once you get the hang of it, it's pretty easy.

Fully mature bonds (30 years old or more) will be auto-redeemed. I think you get a 1099 form in January for any redemption and you can see the cost basis for each bond, a nice round number like $50 or $100 or $250. I think you just enter these as a cost basis into turbo tax (along with the 1099 info) and you are all set.

I have not done savings bond stuff on turbo tax yet, but I assume that's how it works.
I would ask if others here could comment on Turbo Tax savings-bond entry if they have done it (and thanks in advance for this info).

It's been ages since I did my taxes manually, so any Turbo Tax advice regarding savings bonds would be great. I assume others are in the same boat here.

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KlingKlang
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Re: Question about Savings Bonds

Post by KlingKlang » Mon Apr 16, 2018 1:19 pm

rgs92 wrote:
Mon Apr 16, 2018 12:35 pm
First, I think the best thing to do is put them all in a Treasury Direct account to avoid holding any paper securities.
(This was some advice up above in this thread.)
Then you will see exactly what you have and have the option to redeem them, send the proceeds to your bank account, put them in another type of treasury security, whatever. And you will see all the current values. So definitely do this right away if it's more than just a few bonds.

Go to the treasury direct site, open an account, read the instructions, and ask here if you have questions about the process after this research.
Good luck.
TD can be a little confusing, but once you get the hang of it, it's pretty easy.

Fully mature bonds (30 years old or more) will be auto-redeemed. I think you get a 1099 form in January for any redemption and you can see the cost basis for each bond, a nice round number like $50 or $100 or $250. I think you just enter these as a cost basis into turbo tax (along with the 1099 info) and you are all set.

I have not done savings bond stuff on turbo tax yet, but I assume that's how it works.
I would ask if others here could comment on Turbo Tax savings-bond entry if they have done it (and thanks in advance for this info).

It's been ages since I did my taxes manually, so any Turbo Tax advice regarding savings bonds would be great. I assume others are in the same boat here.
Actually I'm redeeming my savings bonds from Treasury Direct and keeping my paper bonds as long as possible, but to each his own.

Treasury Direct does not send you a 1099, you have to log in and download it in a non-standard format.

To enter savings bond interest in Turbo Tax you start an interest income entry and fill in the name of the institution (Treasury Direct or a bank). There is a check box on the screen with "My form has info in more than box 1 (this is uncommon)". Check the box and the treasury/savings bond entry field appears. I don't know if the automatic interest import feature works correctly for savings bonds or not.

rgs92
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Re: Question about Savings Bonds

Post by rgs92 » Mon Apr 16, 2018 7:43 pm

Thanks a milliom Kling Klang for that detailed info; I appreciate it.
That's great that TD does not send a physical 1099. I hate getting things that are important in snail mail (or any paper form).

By the way, is there any reason to keep paper savings bonds at all? I don't see any but I noted your comment.

But thanks again for the info and best to you.

StraightEdge
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Re: Question about Savings Bonds

Post by StraightEdge » Wed Apr 18, 2018 6:46 pm

Sorry I'm still really confused, do you mind breaking it down more for me with these questions? KlingKlang I read through your responses but I got lost trying to understand lol. Sorry thank you!! Maybe if you can number your responses based off my questions for each?

1.) Regarding #2 though, I still need a little help understanding. What happens if you cash a bond before final maturity, will the bank just send you a 1099 at the beginning of the next year and you only need to record the interest for the year you cashed it and then you're done right? And if it's before final maturity when you cash it that's ok to do right? The 1099 will only show the interest that was accrued to the point when you would have cashed it and you don't need to report the excess that would have accumulated if you waited until final maturity correct?

2.) Or let's say you cash it in the final year maturity hits but what if your address changes between the time of the date you gave to the bank and when they send the 1099-INT in the early part of next year?

3.) I'm still a little confused about if you don't cash the bond on the year it matured. Let's say in this example, I don't cash it in 2028 when the interest matures and I cash it in 2029. But let's say I report the interest earned on my 2028 tax return like I'm supposed to even though I didn't receive a 1099. Will the bank still send you a 1099 in early 2030 about you cashing it in 2029? Because if so, that's confusing because you have already reported it for 2028 and then what do you do with that 1099 they sent? Or does the bank not send you a 1099 in early 2030 because they know you reported it on your taxes in 2028 even though you hadn't cashed it yet?

4.) Or let's say you forget to cash it in 2028 when it finally matures and you also forget to report the interest in 2028. And let's say you cash it in 2029. You said the bank will then send you a 1099 in early 2030 showing that you cashed it in 2029. Can you not report the interest then for 2029 or would you get in trouble since it actually happened in 2028? Or would just reporting the interest on your 2029 tax return work fine as long as you provided an explanation that you are reporting it in 2029 even though it matured in 2028? Would that be enough and you wouldn't get in trouble?

5.) A lot of my bonds show final maturity in December of a lot of years. For those, how do I know the exact date of when it finally matures and when I can take it to the bank to cash it? Or when a bond maturity says like 12/2029...does that mean last date it matures is always just the end of the month? If so, I wouldn't be able to get it to the bank in time to cash it for the year end?

6.) If you keep them in just paper form and cash them at a local bank, what if the bank you are part of doesn't cash them? Can you then just go to any bank or do you have to mail them in to the place up in Minnesota?

7.) If I cash 10-15 in one year and if the bank or whomever allows it, is that any problem in regards to taxes for that high of a number in one year?

8.) The bank is supposed to send you the 1099 form in January of the following year you redeem it right? What if you don't receive the 1099 form from the bank? Do you just contact them to send another one?


And I'm confused, I entered all my 10-15 bonds on the Treasury Direct website and saved it with the savings bond calculator so I can pull them up periodically and look at the values. But I didn't register an account or turn them into electronic ones? What's the pros and cons to turning them into electronic or just cashing them at a bank? Also, if you convert them to Treasury Direct, what do you do with the physical paper bonds you have? I've heard using that website is extremely difficult and I'm a little nervous about doing it? And how does Treasury Direct know your bank account information? You just type it in? What if you change banks multiple times over the years? Do you have the option to just keep updating your new bank information?

Just confused on what to do. What does a cost basis for each bond mean and why do you have to enter that as well for your taxes? I thought you only enter the interest from the bond on your taxes?

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Earl Lemongrab
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Re: Question about Savings Bonds

Post by Earl Lemongrab » Wed Apr 18, 2018 9:49 pm

I had one year where I declared the interest in year of maturity, but cashed it the next. You just account for that on your tax return.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

StraightEdge
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Re: Question about Savings Bonds

Post by StraightEdge » Fri Apr 20, 2018 9:19 am

Bump thanks.

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KlingKlang
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Re: Question about Savings Bonds

Post by KlingKlang » Sat Apr 21, 2018 9:09 am

StraightEdge wrote:
Wed Apr 18, 2018 6:46 pm
Sorry I'm still really confused, do you mind breaking it down more for me with these questions? KlingKlang I read through your responses but I got lost trying to understand lol. Sorry thank you!! Maybe if you can number your responses based off my questions for each?

1.) Regarding #2 though, I still need a little help understanding. What happens if you cash a bond before final maturity, will the bank just send you a 1099 at the beginning of the next year and you only need to record the interest for the year you cashed it and then you're done right? And if it's before final maturity when you cash it that's ok to do right? The 1099 will only show the interest that was accrued to the point when you would have cashed it and you don't need to report the excess that would have accumulated if you waited until final maturity correct?

2.) Or let's say you cash it in the final year maturity hits but what if your address changes between the time of the date you gave to the bank and when they send the 1099-INT in the early part of next year?

3.) I'm still a little confused about if you don't cash the bond on the year it matured. Let's say in this example, I don't cash it in 2028 when the interest matures and I cash it in 2029. But let's say I report the interest earned on my 2028 tax return like I'm supposed to even though I didn't receive a 1099. Will the bank still send you a 1099 in early 2030 about you cashing it in 2029? Because if so, that's confusing because you have already reported it for 2028 and then what do you do with that 1099 they sent? Or does the bank not send you a 1099 in early 2030 because they know you reported it on your taxes in 2028 even though you hadn't cashed it yet?

4.) Or let's say you forget to cash it in 2028 when it finally matures and you also forget to report the interest in 2028. And let's say you cash it in 2029. You said the bank will then send you a 1099 in early 2030 showing that you cashed it in 2029. Can you not report the interest then for 2029 or would you get in trouble since it actually happened in 2028? Or would just reporting the interest on your 2029 tax return work fine as long as you provided an explanation that you are reporting it in 2029 even though it matured in 2028? Would that be enough and you wouldn't get in trouble?

5.) A lot of my bonds show final maturity in December of a lot of years. For those, how do I know the exact date of when it finally matures and when I can take it to the bank to cash it? Or when a bond maturity says like 12/2029...does that mean last date it matures is always just the end of the month? If so, I wouldn't be able to get it to the bank in time to cash it for the year end?

6.) If you keep them in just paper form and cash them at a local bank, what if the bank you are part of doesn't cash them? Can you then just go to any bank or do you have to mail them in to the place up in Minnesota?

7.) If I cash 10-15 in one year and if the bank or whomever allows it, is that any problem in regards to taxes for that high of a number in one year?

8.) The bank is supposed to send you the 1099 form in January of the following year you redeem it right? What if you don't receive the 1099 form from the bank? Do you just contact them to send another one?


And I'm confused, I entered all my 10-15 bonds on the Treasury Direct website and saved it with the savings bond calculator so I can pull them up periodically and look at the values. But I didn't register an account or turn them into electronic ones? What's the pros and cons to turning them into electronic or just cashing them at a bank? Also, if you convert them to Treasury Direct, what do you do with the physical paper bonds you have? I've heard using that website is extremely difficult and I'm a little nervous about doing it? And how does Treasury Direct know your bank account information? You just type it in? What if you change banks multiple times over the years? Do you have the option to just keep updating your new bank information?

Just confused on what to do. What does a cost basis for each bond mean and why do you have to enter that as well for your taxes? I thought you only enter the interest from the bond on your taxes?
1.) Yes, yes (as long as you have held the bond for one year), and yes.

2.) If you have an account at the bank you have presumably notified them of your change of address, otherwise you have notified the post office and are having your mail forwarded to your new address. If you are expecting a 1099 and haven't received it by the end of February you probably want to contact the financial institution. You can always declare your interest income on your tax return even if you haven't received a 1099.

3.) The bank sends you a 1099 for the year that you cashed in the bond. I gave a pretty detailed answer on how to report this in my previous post.

4.) Theoretically you can "get in trouble" for not reporting savings bond interest the year the bonds mature. In reality the only way that it would occur is if the IRS was doing a full audit on you and you had failed to declare a significant amount of interest.

5.) All US Savings Bonds accrue interest/mature on the first business day of each month so you have the full month of December to get it to the bank.

6.) Banks can refuse to cash them. You can call around to other banks or mail them in.

7.) You can enter as big a number as you want on line 8a. Bunching large amounts of income, interest or otherwise, into a single year can push you into a higher tax bracket.

8.) Yes and yes.

If you open up a Treasury Direct account and convert your savings bonds to electronic form you will then be able to redeem them fully or partially online at any time (one year after the original issue) and they will be redeemed automatically when they mature. In order to have a Treasury Direct account you are required to link it to a bank account to handle your purchases and redemptions. There is paperwork to mail in including a medallion signature guarantee. I think that when you convert the paper bonds you have to mail them in. It's not the world's greatest website but "extremely difficult" is an overstatement.

The reason that I personally prefer paper savings bonds is in case I drop dead my wife will not go within ten feet of a computer but is willing to walk into a bank with them.

The cost basis for a savings bond is the purchase price. I can't think of anywhere that you have to enter it on federal tax returns.

Gill
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Re: Question about Savings Bonds

Post by Gill » Sat Apr 21, 2018 9:14 am

Earl Lemongrab wrote:
Wed Apr 18, 2018 9:49 pm
I had one year where I declared the interest in year of maturity, but cashed it the next. You just account for that on your tax return.
I'm confused. Why would you report the interest in the year of maturity but not redeem the bonds?
Gill

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KlingKlang
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Re: Question about Savings Bonds

Post by KlingKlang » Sat Apr 21, 2018 9:22 am

Gill wrote:
Sat Apr 21, 2018 9:14 am
Earl Lemongrab wrote:
Wed Apr 18, 2018 9:49 pm
I had one year where I declared the interest in year of maturity, but cashed it the next. You just account for that on your tax return.
I'm confused. Why would you report the interest in the year of maturity but not redeem the bonds?
Gill
You report the interest because that's what the law specifies. I suppose that you could be physically unable to get to a bank, but the usual reason is 'I forgot'. My 82 year old father didn't redeem his because he thought that it was helping the government fight terrorism.

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Earl Lemongrab
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Re: Question about Savings Bonds

Post by Earl Lemongrab » Sat Apr 21, 2018 12:33 pm

Gill wrote:
Sat Apr 21, 2018 9:14 am
Earl Lemongrab wrote:
Wed Apr 18, 2018 9:49 pm
I had one year where I declared the interest in year of maturity, but cashed it the next. You just account for that on your tax return.
I'm confused. Why would you report the interest in the year of maturity but not redeem the bonds?
Why did I procrastinate going to the bank with the first ever batch that reached final maturity? That's a real behavioral question. I don't have a good answer for you, other than to quote Ann Leckie from her fine science fiction series Ancillary), "Sometimes I don't know why I do the things I do."

I didn't cash them, but the law required declaring the interest. That was a sufficiently unpleasant combination of actions that I make sure that I cash the maturing bonds in December each year.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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