Do you have to pay taxes on savings bonds when they mature? (2024)

Do you have to pay taxes on savings bonds when they mature?

Reporting the Interest for Taxes

Do you pay taxes on fully matured savings bonds?

If you hold savings bonds and redeem them with interest earned, that interest is subject to federal income tax and possibly federal gift taxes (highly unlikely as the per-person cap is $10,000 and the gift tax exemption is $17,000).

How much tax will I pay on my EE savings bonds?

The interest on EE bonds isn't taxed as it accrues unless the owner elects to have it taxed annually. If an election is made, all previously accrued but untaxed interest is also reported in the election year. In most cases, this election isn't made so bond holders receive the benefits of tax deferral.

Is there a tax penalty for not cashing in matured savings bonds?

While the Treasury will not penalize you for holding a U.S. Savings Bond past its date of maturity, the Internal Revenue Service will. Interest accumulated over the life of a U.S. Savings Bond must be reported on your 1040 form for the tax year in which you redeem the bond or it reaches final maturity.

What happens when a EE bond reaches maturity?

Key points. Series EE bonds mature in 20 years but earn interest for up to 30 years. The U.S. Treasury guarantees Series EE bonds will double in value in 20 years. You don't receive the interest on your Series EE bond until you cash it.

How do you avoid tax on a mature savings bond?

How much tax do you pay on matured bonds?

The tax rate charged will depend on how long you held the bond. If you've held it for less than a year, you'll be charged at your regular income tax rate. Bonds held for more than a year will be subject to potentially lower long-term capital gains rates.

Do you pay federal taxes on EE bonds when cashed?

Key Takeaways. Interest from EE U.S. savings bonds is taxed at the federal level but not at the state or local levels for income. The interest that savings bonds earn is the amount that a bond can be redeemed for above its face value or original purchase price.

Do you need to report savings bonds on your taxes?

Savings bond interest is subject to federal income tax; however, taxation can be deferred until redemption, final maturity, or other taxable disposition, whichever occurs first. You also have the option of claiming interest annually for federal income tax purposes.

Will I get a 1099 for cashing in savings bonds?

At a bank: If a bank cashes your savings bond, they are responsible for getting you a 1099-INT. They may give or mail you the 1099-INT as soon as you cash the bond or they may wait until the following January.

Can a bank refuse to cash a savings bond?

If you have a paper savings bond but your bank can't cash it, you'll need to redeem it online at TreasuryDirect or at a financial institution that will cash savings bonds for non-account holders.

Which bonds are tax exempt?

Municipal Bonds

Most bonds issued by government agencies are tax-exempt. This means interest on these bonds are excluded from gross income for federal tax purposes.

How do you cash in bonds that have matured?

When those bonds mature and stop earning interest, it is time to redeem them. Redeeming bonds is easy - just take them to a local bank or send them to the Bureau of the Fiscal Service.

How much is a $100 series EE bond worth after 30 years?

When should I cash in my Series EE bonds?

You can cash in (redeem) your EE bond after 12 months. However, if you cash in the bond in less than 5 years, you lose the last 3 months of interest. For example, if you cash in the bond after 18 months, you get the first 15 months of interest.

How long does it take for a $100 EE savings bond to mature?

All Series EE bonds reach final maturity 30 years from issue. Series EE savings bonds purchased from May 1995 through April 1997 increase in value every six months.

How do I report cashed savings bonds on my taxes?

When you redeem it, you'll receive a Form 1099-INT that shows the full amount of interest the bond earned. You can report the interest earned every year. If you do, you can subtract the interest you paid tax on in prior years from your taxable income.

How do I declare savings bonds on my taxes?

For paper savings bonds

The interest will be reported under the name and Social Security Number of the person who cashes the bond or who owns it when it matures. The 1099-INT will include all the interest the bond earned over its lifetime.

How much is an EE bond worth at full maturity?

Current Series EE bonds mature after 30 years, but they are guaranteed to double in value in the first 20 years during which time the interest rate is fixed. For example, if you invested $5,000 into Series EE bonds today, you are guaranteed to have at least $10,000 in 20 years.

What happens to EE bonds after 30 years?

If you still have a paper EE bond, check the issue date. If that date is more than 30 years ago, it is no longer increasing in value and you may want to cash it. See Cashing EE and I savings bonds. To find out how much your paper EE savings bond is worth, use our Savings Bond Calculator.

What interest income is not taxable?

Interest earned on certain U.S. savings bonds, such as Series EE and Series I bonds, is exempt from state and local income taxes. Government bonds such as Series HH bonds and Treasury Inflation-Protected Securities (TIPS) may also be tax-exempt. Interest earned on 529 plans is usually exempt from federal taxes.

Does it matter whose Social Security number is on a savings bond?

Do the address and Social Security Number on the bonds have to match the customer's address and Social Security Number? Not necessarily. The customer may have moved or the bonds may have been a gift and contain the purchaser's information.

How long does it take for a $50 savings bond to mature?

They're available to be cashed in after a single year, though there's a penalty for cashing them in within the first five years. Otherwise, you can keep savings bonds until they fully mature, which is generally 30 years.

How do I cash in my Series EE savings bonds?

You may be able to cash in paper EE bonds at a bank where you have an account or through TreasuryDirect. Ask your bank about its process for cashing savings bonds. Ask your bank how much it will cash at one time. Determine the identification or other documents you will need.

What is the difference between EE and HH bonds?

For those, you must look at the issue date. EE and I bonds earn interest for 30 years from the issue date. HH bonds earn interest for 20 years from the issue date.