Message Font: Serif | Sans-Serif
No. of Recommendations: 0
...The money is coming from cashed out Series EE savings bonds. How may I avoid / defer taxes on the interest received from the cashed out bonds?

Hi, ineptFool. Depending on what you want this money used for, I can think of one option. Have you ever heard of the IRC 529 qualified State tuition plans? If you want to have your daughter use this money for a college education, you can redeem those Series EE savings bonds tax-free, open a 529 plan for her (some states allow up to $10,000/year contribution) and put the contribution in the plan. The interest will be taxable to the student when withdrawn for college at their usually lower tax rate. Most state plans require you to wait 1 year from the date the account was opened before you can begin receiving distributions. See IRS Publication 970 for more details.

Of course, if you didn't intend for this money to be used for college, you may end up paying the tax on the interest upon cashing them, and at your tax rate. Just a suggestion. If you're interested in learning more, try this site:


Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.