WE HAVE 1980s GOV'T USA EE BONDS -- HOW CAN WE SAVE ON IRS TAXES ? WE ARE 77 YRs OLD
I don't know of any way you can avoid paying income tax on the interest when you cash in the bonds. If you bought them before Oct. of 1986, they have not been paying paying the original high interest since 1996.There are two times each year when it is best to cash them. Make sure you do so right after the six months dates of the purchase so you don't lose any interest. If you cash them before the calendar dates you could lose that six months interest. You can go to the bond site to see what interest they are paying at this time. If you enter the date of purchase, it will tell you what they are worth right now.http://www.publicdebt.treas.gov/sav/sav.htmCarol
WE HAVE 1980s GOV'T USA EE BONDS -- HOW CAN WE SAVE ON IRS TAXES ? WE ARE 77 YRs OLD Check out conversion to HH BONDS
Check out conversion to HH BONDS According to the USTreas. website, the exchange muct be made within a year of the EE bonds maturing. If the bonds were purchased in the 1980s, wouldn't they be way past the maturity date? If they were purchased before Nov. 1986, they had a ten year maturity date. Purchased after Nov. 1986 until 1993, the maturity date was 12 years.http://www.publicdebt.treas.gov/sav/savoldee.htmhttp://www.publicdebt.treas.gov/sav/sbhexchg.htmCarol
OK, I've gone to the website and entered an Oct. 1986 date into the calculator. It showed that the bond has not matured yet, so it could be converted to a HH. I guess the Treas. meant the extended maturity when it said it could be converted within a year.Right now EE bonds purchased in Aug. and Oct.1986 are earning 4.5% which is not bad considering. Also there is no state income tax on that.I have quite a few of those bonds, inherited and purchased, which is why I had recently looked up the calculator. I don't need the $$ or want to pay the tax due so right now I'm not going to cash them. I'll see what the rate will be in Nov. I bought some I Bonds while they were still at a good base rate back in April.Carol
The conversion to HH bonds is done AFTER the bonds reach final maturity, 2026. THEN you have a year to do it, but your EE bonds aren't earning interest anymore so you should do it as soon as they reach that final maturity. The HH bonds pay interest into your bank account every 6 months, on the first business day of the month. Therefore, at that point the interest is taxable. However, you don't pay the accumulated deferred interest from the 30 years you held the EE bonds until the HH bonds mature, 40 years from your original purchase. When you consider the tax deferrment aspect, the HH bonds are a pretty good deal. Best wishes, Chris
a pretty good deal.Especially if there could be a guarantee I'd live to after 2026! In that year I will be 92 years old and our original poster of this thread would be over 100. ;-)In my case, half of my EEs came as POD from my mom and I showed the interest to date on her income tax the year she died, 1996. Another plus was that she had no tax liability that year. So if I cash those bonds, I'll only have to pay tax on the interest of the past five years, which was below the original 7 1/2% of the bonds.Carol
If the tax isn't deferred, the HH bonds aren't that great a deal. Currently they pay 4%. However, the ones we have resulted from EE bonds on which no tax had ever been paid. If it were paid, about 1/3 of the value of the bonds would go to Uncle. So accepting 4% on the full amount is the same amount of interest as getting 6% on a different investment--in the current rate environment, not that shabby. But if there weren't tax to pay, you can do better with corporates or if you are in a higher bracket, munis. Will we live to see the HH bonds mature? So far, not a big problem. We can cash them in at any time, of course, forfeiting the interest since the last pay date. Best wishes, Chris
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