Three Things Every Savings Bond Owner Needs To Know
Posted on November 2, 2017
SavingsBonds.com indicates over 50 million individuals own U.S. Savings Bonds which are stored away and not being properly managed, which could result in losing money and unfavorable tax situations. Here are three important facts every bond owner 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 issued since 1935.
- The series, month and year of issue determines the rules, regulations, interest rates, maturity dates and investment performance, which often vary.
- To quickly learn bond values and performance, access a complimentary savings bond calculator
2. Over $23 Billion Worth Of Savings Bonds Are Earning Zero Interest. Holding Onto These Matured Bonds Is Like Giving Uncle Sam An Interest Free Loan.
- Paper EE bonds can often be worth a lot more than their face value (the dollar amount printed on the bond).
- Bonds will continue to earn interest beyond their face value – also known as initial maturity – until they reach final maturity, which is usually 30 years from the issue date.
- Since January 2012, bonds have been sold at face value, in electronic format only.
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.
- Not knowing bond values often results in redeeming too many bonds when needing to raise cash.
- Arbitrarily grabbing bonds from the bottom of a pile could result in mistakenly cashing in the highest interest rate earners and holding onto the worst performers.
- Redeeming a substantial number of bonds which have earned a lot of interest in any given year could create unpleasant tax surprises, especially for those on social security or fixed incomes.
- A 1099-INT for all of the interest earned 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 any paper bonds.
- Electronic bond owners must print out the 1099-INT from their Treasury Direct Account.
Whether holding or redeeming bonds, knowing important financial information can help bond 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.©