Spring Lake, New Jersey (PRWEB) April 10, 2014
With the April 15 tax-filing deadline quickly approaching, SavingsBonds.com is reminding savings bond owners to report the interest income from savings bonds on their federal income tax returns. This applies to bonds that have been redeemed (cashed in) as well as for bonds that have reached final maturity.
The difference between the purchase price and the cash in value of a savings bond is considered reportable interest income. The financial institution that redeems the bond will either issue a 1099-INT for all of the interest earned on the spot, or mail the form in the beginning of the following year.
Additionally, according to the Internal Revenue Service, once a savings bond reaches its final maturity – regardless if the bond has been cashed in - the owner is required to report all of the interest income (unless previously reported annually) on a federal income tax return. Failure to report this income could result in IRS fines and penalties, and possibly interest on those penalties, depending upon how much time has elapsed since the bond(s) stopped earning interest.
Savings bond interest income (if not more than $1,500) should be reported with other interest on the "Interest" line of a tax return in the year the bond was redeemed. For interest amounts over $1,500 a Schedule B (form 1040A or 1040) should be included. Savings bonds are free from state and local taxes.
Most savings bonds, including Series E (issued December 1965-June 1980), EE and I, will reach final maturity in 30 years. Series E bonds, issued May 1941 through November 1965, will earn interest for 40 years. All Series E bonds have stopped earning interest.
Savings bonds that have reached final maturity are no longer earning any interest. Matured bonds should be cashed in to avoid giving the government an interest free loan.
It is no longer a chore or a mystery to learn financial and maturity information about savings bonds. Certain complimentary, online bond calculators and bond management services provide this data, along with other pertinent information. SavingsBonds.com’s VIP services email final maturity date alerts to bond owners months before it happens and even indicate how much interest will be posted on a 1099-INT if cashing in.
Click here to watch SavingsBonds.com's Top 5 Savings Bond Tax Tips video.
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