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Savings Bond Danger Zone
If you can identify with any of the above situations, you may already be in the 'Savings Bond Danger Zone' which is defined as that place where you will find yourself if you don't create an Exit Strategy to dispose of your US Savings Bonds well BEFORE they reach final maturity, or BEFORE you are forced to take RMDs from your other investments while you still own matured savings bonds.
- Do you own any series E or EE bonds before 1985?
- Are you or your parents over 65 years of age?
- Have any of your savings bonds stopped earning interest?
- Are you or your parents being forced to take Required Minimum Distributions (RMDs) from your other investments?
Once someone is forced to take RMDs, and their savings bonds have reached final maturity, many persons find themselves in the unpleasant, unenviable position of having too much income and having to pay unnecessary federal income taxes because they didn't properly plan for disposal of their savings bonds. In many instances, individuals are being taxed on their social security benefits!
Many persons continue to hold onto their savings bonds even after their bonds have reach final maturity (and have stopped earning interest). They don't realize that they are in violation of the IRS regulations that state '...that upon reaching their final maturity, you must report all of the interest income earned by your savings bonds'.
For many people this means that their savings bonds - which could be worth 4, 5 or 6 times their face value, most of which is interest income - MUST be reported on their federal income tax return for the same tax year(s). If you have savings bonds that have already reached final maturity, you are still obligated by IRS statute ##550 to report the interest income already earned - even if you don't plan on cashing-in your bonds right away!
So the message is clear: Don't get caught in the dreaded 'Savings Bond Danger Zone'. Login to your Savings Bond Guru account print an updated report and take it to your Financial Planner, Accountant or Tax Advisor to find out what your particular situation is.
Jack Quinn - CEO - SavingsBonds.com
2022 Route 71 - Suite 200
Spring Lake Heights, NJ 07742