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Subject:  EE bond - who should redeem it? Date:  1/11/2006  11:21 AM
Author:  YinYtheYwoodsY Number:  82541 of 127546

Good morning,
My child has EE bonds that he wishes to use to pay college expenses. They have his SSN on them, but are co-named with a parent.
Who should redeem them, the child or the parent?
In Publication 970, the following rules are presented:
Who Can Cash In Bonds Tax Free

You may be able to cash in qualified U.S. savings bonds without having to include in your income some or all of the interest earned on the bonds if you meet the following conditions.
* You pay qualified education expenses for yourself, your spouse, or a dependent for whom you claim an exemption on your return.
* Your modified adjusted gross income (MAGI) is less than $76,200 ($121,850 if filing a joint return).
* Your filing status is not married filing separately.

>>> Under these guidelines, above, either the parent or the child can cash the bonds because the parents file jointly.

Publication 970 also says:
" The owner must be at least 24 years old before the bond's issue date. The issue date is printed on the front of the savings bond."

So, this means that even though the bonds were originally put in the child's name, the co-named parent is the Owner, correct?

It would make tax sense for the child to cash the bonds, but some hidden rule might prevent him from taking the tax savings.

Anybody have any advice?

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