Stuffing any Savings Bonds away in drawers, shoe boxes or safety deposit boxes? SavingsBonds.com provides five reasons why you should pluck them out of storage and be thankful that you own them.
1. Savings Bonds will never lose their value.
Even in the worst of economic times, savings bonds may increase in value, however, they will never lose any of their value
2. Many savings bonds continue to earn interest beyond their face value.
Most paper savings bonds continue to earn interest after they reach the amount printed on the front of the bond (aka face value) until they reach their final maturity, usually 30 years from their issue date. Most paper EE bonds were purchased at half of their face value. Electronic bonds are purchased AT face value.
SavingsBonds.com offers bond owners a little extra “gravy” by providing a complimentary savings bond calculator which indicates bond values and performance, along with a complimentary printable, detailed, Savings Bond Inventory Report© featuring a “what this means to you” explanation, not offered elsewhere.
3. Savings Bonds are free from state and local taxes.
Unfortunately, they are subject to any federal, estate and inheritance taxes.
4. You can defer the reporting of interest income earnings until redemption or when the savings bond reaches final maturity, whichever occurs first.
Note: Once a bond reaches final maturity (usually 30 years from the issue date) even if it was not cashed in, IRS regulations state that you should report the interest income on your Federal Income Tax Return in that year.
5. You may not owe any federal income taxes on the interest earnings at redemption by choosing the annual interest reporting option.*
By choosing the annual reporting option, you must report the total lifetime interest earning(s) on all savings bonds you own. Each and every year thereafter, you must report the annual interest earned amounts for those bonds (along with the interest from any new bonds purchased) on your Federal Income Tax Return(s). By reporting total lifetime interest earned amounts in a given year – prior to redemption – you can also avoid having to report a large amount of interest income at redemption (or when the bond(s) reaches final maturity – whichever occurs first).*
IMPORTANT: In the year a bond(s) is redeemed, a 1099-INT will be issued for ALL of the interest earned REGARDLESS if interest was already reported on prior tax returns. You must include any applicable prior tax returns, indicating any previously reported interest.
SavingsBonds.com’s Bond Inventory Report© indicates total lifetime interest earned amounts. Each December, total annual interest earned amounts are also indicated.
SavingsBonds.com is an online financial bond management company providing essential U.S. Savings Bond information since 1992. For over 26 years, bond experts have created various consumer programs, tools and services not offered elsewhere, including an online complimentary savings bond calculator, providing cash in values with important financial information presented on a personalized, color-coded, Savings Bond Inventory Report. Unique savings bond management services include signature monthly summary emailed Savings Bond Statements, which help bond owners maximize their investment, avoid losing money and paying unnecessary taxes.
By Jackie Brahney, SavingsBonds.com, firstname.lastname@example.org, 732-887-8941, www.SavingsBonds.com
*Rate As Of November 2018.
(*depending on several other income, financial and tax circumstances – contact a professional financial or tax planner).