Three Important Savings Bonds Facts
Posted on July 28, 2017
SavingsBonds.com says over 50 million individuals own U.S. Savings Bonds which are stored away and not being properly managed. Here are three important savings bond facts every investor should know
1. Savings Bonds Are Not Created Equal.
Various series of bonds, such as A-D, E, EE, I, H and HH have been sold since 1935. The series, month and year of issue will determine the rules, regulations, interest rates, maturity dates and investment performance for that bond, which can vary a lot. To quickly learn bond values access SavingsBond.com’s complimentary savings bond calculator
2. Paper EE Bonds Can Be Worth A Lot More Than The Face Value.
When a paper bond has reached face value the dollar amount printed on the bond it has reached its initial maturity. They will continue to earn interest beyond their face value until they reach final maturity, which is usually 30 years from the issue date.
Once a bond reaches final maturity it will no longer earn any interest. Holding onto matured bonds is like giving Uncle Sam an interest free loan.
Since January 2012, savings bonds have been sold at face value, in electronic format only. The only way to obtain a (Series I) paper bond is via a Federal Income Tax refund.
Misunderstanding bond values often results in redeeming too many bonds when needing to raise cash. Investors also arbitrarily grab bonds from the bottom of the pile. They often mistakenly cash in the highest interest rate performers and hold onto the worst performers in their portfolio.
3. Cashing In Savings Bonds Creates A Taxable Event.
The difference between the purchase price and cash-in value is considered report-able interest, which must be included on a Federal Income Tax Return in the year the bond is redeemed.
Redeeming a substantial number of bonds that have earned a lot of interest in any given year could also create unpleasant tax surprises, especially for those on social security.
When redeeming, interest earned amounts over $10 will be reported on a 1099-INT, which will be either issued on the spot or mailed (in the first few months of the following year) by the financial institution that cashed in the bond(s). Electronic bond owners must go to their Treasury Direct Account and print out the 1099-INT.
A complimentary savings bond calculator which includes a detailed Bond Inventory Report©, provides cash in values, interest rate performance, total interest earned amounts, maturity and tax information for paper E, EE and I Savings Bonds. An easy to understand, what this means to you, explanation helps investors make smart financial decisions about their bonds. Once educated, investors can confidently choose the best (lower interest earning) bonds to redeem first, and hold onto the better performers.
Whether holding or redeeming bonds, having basic financial information can help investors maximize their investment, avoid losing money and prevent unfavorable tax situations.
SavingsBonds.coms complimentary calculator provides cash in values, interest rates and a personalized, printable, color-coded, Savings Bond Inventory Report along with a What This Means To You explanation. For ongoing savings bond management & updated bond values via unique monthly e-Bond Statements, try a free 14-day trial of the SavingsBonds.com VIP Membership which includes a helpful Cash-In-Report.©