What Should I Do With My Ee Series Savings Bonds?

By Increase Savings | Published: November 22, 2009

Most were issued 1993- 1995. The interest rates varies from 2.5 – 3.5 approx.
I paid college tuition and other expenses for my kids in college this year. I am wondering if I should cash in an amout that offsets those expenses and avoid the taxes.
It would seem I could do better with these funds in a money market account.
I would welcome any and all thoughts on this matter.
Thank You

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4 Comments

  1. Chris L.
    Posted November 22, 2009 at 6:39 am | Permalink

    I also have a lot of EE bonds, we are saving them for college for our children too. Look into the http://www.irs.gov, and http://www.savingsbonds.gov websites to get details, since the interest is tax free if used directly for education. That is what we are planning on doing with ours. Otherwise, you would just pay your normal tax rate on the interest. If you decide not to use for education now, I would just leave them alone and forget about them until the are done bearing interest (30years?). Good if you lose you job for example, since if your income is lower then you pay a lower tax rate anyway. ** If you cash them in just ot deposit into a money market accoun, you will be paying 15, 25, or 33% tax on that interest depending on your tax bracket, so you would lose that amount right away. Just leave them alone for a rainy day if not for college at this time. Of course it makes a big difference if we are talking $2000 or $100,000 in bonds.

  2. the tax lady
    Posted November 22, 2009 at 9:46 am | Permalink

    Look at IRS form 8815 and see if you are eligible to exclude the interest if you cash in the savings bonds. (You must meet all criteria and any money you exclude cannot also be used for an education credit.)
    Yeah, the interest rates are low, but you can’t lose your money since a savings bond can’t dip in value.

  3. Anonymous
    Posted November 22, 2009 at 2:41 pm | Permalink

    first you see if they qualify for the higher education exemption. If you find the us bonds website to see how you have to have them registered to get the exemption. They have to have certain ownership to qualify.
    You would have top pay taxes on the interest otherwise and then I would look into a bank CD.

  4. Anonymous
    Posted November 22, 2009 at 6:11 pm | Permalink

    Cash them in. You can do better.

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