Three Reasons Why 50 Million Investors Should Review Their Savings Bonds In December According To SavingsBonds.com

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SavingsBonds.com has declared December Is Savings Bond Awareness Month, since it is the most critical time for savings bond owners to closely review their bonds to avoid potential tax time headaches as well as take advantage of often overlooked beneficial tax reporting options.

SavingsBonds.com Is The #1 Site For Bond Investors Providing A Complimentary Savings Bond Calculator With A Bond Inventory Report.

The IRS requires reporting interest earnings on all matured savings bonds in the year they reached final maturity - even if they haven't been cashed in. - Jackie Brahney, U.S. Savings Bond Expert at SavingsBonds.com

Every year unsuspecting savings bond owners arbitrarily cash in bonds not realizing there could be potential tax implications. Additionally, hundreds of millions of paper bonds worth billions of dollars are stashed away in safety deposit boxes or stuffed in the bottom of drawers which have have reached final maturity and that interest income should be reported. SavingsBonds.com provides three reasons why investors should take a closer look at their savings bonds in December:

1. Required Tax Reporting On Redeemed And Matured Bonds

Each December, investors should review Interest earned amounts on savings bonds they redeemed throughout the year, as well as any bonds they are holding that have reached final maturity and have NOT been cashed in. According to IRS rules, all of that interest income should be reported on ones Federal Income Tax Return.

A complimentary online savings bond calculator provides current cash in values, total interest earned amounts, as well as important timing and financial details, also displayed on a (complimentary) Savings Bond Inventory Report.

  • Bonds can be worth several times more than their face value (amount printed on bond), possibly creating large interest earning amounts which need to be reported.
  • The difference between the purchase price and redemption value is considered report-able interest income.
  • When redeeming (paper) bonds at a bank, a 1099-INT will be issued either on the spot or within the first few months of the following year.
  • SavingsBonds.com Members should review their account and monthly emailed Bond Statements every December for that years list of redeemed (paper) and matured bonds.

2. "What If" Scenarios Can Help Avoid Potential Tax Liabilities

Doing “what if” financial planning scenarios in December helps determine if redeeming some bonds before the end of the year may help avoid large interest income reporting requirements in future years.* This financial planning strategy is especially helpful for those that may be close to retirement or on a fixed income.

  • Always redeem matured bonds first, followed by lowest interest rate performers (which may be the most recently issued bonds)
  • Bonds must be at least one year old to redeem. If redeeming prior to 5 years old, 3 months of interest will be forfeited.
  • SavingsBonds.com Members can easily run different redemption scenarios using their Cash-In Report©.

3. Consider Reporting Savings Bond Interest Earnings Annually.

If properly executed, bond owners may not owe any federal taxes on their savings bonds at redemption. Few bond owners are aware – or take advantage of – this potentially savvy reporting option. For those that are on, or about to be on, a fixed income, annual interest reporting could be a wise financial decision.*

  • Reporting interest annually can start at any time prior to a bonds final maturity.
  • Once elected, the lifetime interest earned amounts for all savings bonds since issuance needs to be reported.
  • Each year thereafter, annual interest earned amounts must be reported on the bonds (and any future bond purchases).**

Checking savings bonds during the holiday season may not be at the top of most bond owner's lists. However, by obtaining bond values and total interest earned amounts, and reviewing ones bond portfolio each December, investors may be able to take advantage of beneficial redemption and tax planning strategies. This could result in being a lot merrier during tax time and for years to come.

About SavingsBonds.com:

SavingsBonds.com is an online financial bond management company providing essential U.S. Savings Bond information since 1992. For over 26 years, bond experts have created various consumer programs, tools and services not offered elsewhere, including an online complimentary savings bond calculator, providing cash in values with important financial information presented on a personalized, color-coded, Savings Bond Inventory Report. Unique savings bond management services include signature monthly summary emailed Savings Bond Statements, which help bond owners maximize their investment, avoid losing money and paying unnecessary taxes.

By Jackie Brahney, SavingsBonds.com, jbrahney(at)savingsbonds.com, 732-887-8941, http://www.SavingsBonds.com

*Always consult with a tax or financial professional before performing any savings bond transactions
**To discontinue annual interest reporting, submit a request to the Treasury Department. Keep copies of all annual interest reporting amounts. When bonds are redeemed, the total amount of interest earnings will be reported on a 1099-INT regardless of any prior years tax reporting.

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Jackie Brahney
@savingsbondsgal
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