How do I report EE savings bond interest on taxes?
Reporting the interest earned on EE savings bonds can be a straightforward process, but it’s important to understand the rules and guidelines set forth by the Internal Revenue Service (IRS). EE savings bonds are a popular investment option for many Americans, offering a fixed interest rate and the potential for tax-deferred growth. In this article, we will discuss how to report the interest on EE savings bonds for tax purposes.
Understanding EE Savings Bonds
EE savings bonds are issued by the U.S. Treasury and are designed to encourage savings. They come in two types: Series EE and Series I. Series EE bonds are fixed-rate bonds, while Series I bonds have a variable interest rate that adjusts every six months based on inflation. Both types of bonds earn interest that is exempt from state and local taxes.
Reporting Interest on EE Savings Bonds
To report the interest earned on EE savings bonds, you will need to complete Form 8815, “Exemptions for Interest on Series EE and I U.S. Savings Bonds.” This form is included in the tax package provided by the IRS.
Here’s a step-by-step guide on how to report the interest:
1. Determine the interest earned on your EE savings bonds for the tax year. You can find this information on the annual statement you receive from the Treasury Department or by logging into your TreasuryDirect account.
2. Fill out Form 8815. You will need to provide the following information:
– Your name and Social Security number
– The type of EE savings bonds you own (Series EE or Series I)
– The issue date of the bonds
– The interest earned on the bonds for the tax year
3. Calculate the taxable interest. The taxable interest is the interest earned on the bonds minus any interest that is exempt from federal income tax. This amount will be reported on Schedule B of your tax return.
4. Attach Form 8815 to your tax return. Make sure to sign and date the form.
Exceptions and Special Cases
There are a few exceptions and special cases to consider when reporting EE savings bond interest:
– If you are a minor, the interest earned on EE savings bonds may be taxable. In this case, the parent or guardian should report the interest on their tax return.
– If you are a disabled veteran, you may be eligible for an exclusion of interest earned on EE savings bonds. You will need to complete Form 8915, “Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989 for Disabled Veterans,” and attach it to your tax return.
– If you redeem your EE savings bonds before they reach maturity, you may need to pay taxes on the interest earned. In this case, you will need to calculate the taxable interest and report it on your tax return.
Conclusion
Reporting the interest earned on EE savings bonds is a relatively simple process, as long as you follow the guidelines provided by the IRS. By understanding the rules and completing the necessary forms, you can ensure that you accurately report the interest on your tax return. If you have any questions or need assistance, consider consulting a tax professional for guidance.
