Form 8815 and Savings Bonds Rollover to 529 (QTP)

[jbkuang]

Hi @Hal_Al 

I must apply 👍 to your knowledgable answer and patient reply even though I end up writing a check of respectable amount to Uncle Sam.

Such a helpful forum!

JB Kuang

[SteveB00]

I still don't get the prompt from my Mac 2021 Deluxe version.  What entries should it be filling in so I can enter them manually?

[AmyC]

If you are entering savings bonds interest on a 1099-T, be sure you enter it in box 3 to trigger the education questions.

@SteveB00

[glenj03-gmailcom]

3. Excludable interest on series EE savings bonds issued after 1989.  attach form 8815 

Schedule B - I cashed US EE savings bonds with $50,000 interest.  all the bonds were purchased after 1989.

can i exclude some of this interest?

[Hal_Al]

@glenj03-gmailcom You haven't provided enough info.  It depends on how the bonds are registered (whose name they're in).  It depends on your MAGI.  As previously stated, the savings bond interest is included in calculating MAGI.  So, having so much interest could disqualify you or reduce the amount of interest that qualifies.     Of course you must also have qualifying educational expenses, for you, your spouse or your dependents, including timely 529 contributions.

 The exclusion benefit is phased out in 2021 for modified AGI of $82,350 to $97,350 (unmarried) and $122,550 to $153,550 (married).

References: https://www.treasurydirect.gov/indiv/planning/plan_education.htm

https://www.investopedia.com/ask/answers/111414/what-education-savings-bond-program.asp#:~:text=An%2....

https://thismatter.com/money/tax/education-savings-bonds-program.htm

[kkattumadam]

I redeemed some Treasury I bonds in 2021 and moved the funds to a qualified QTP (college 529) account within 60 days. I cannot take an interest deduction due to MAGI exclusions. The 1099-INT workflow forces me to enter an institution name and address and I entered QTP and the 529 account's mailing address but then in the final federal review, it flags in form 8815, that these fields must be blank. If I proceed to blank it, the validation in the previous workflow of entering the 1099-INT as QTP flags it saying that I must enter the institution name and address. I am in an endless loop with this.

I chatted with a live TT expert and she is stumped as well and promised to get back to me in a day or two. Worst case, send me a desktop version of TT which apparently works fine. Any clues from the community? 

[Hal_Al]

I'm stumped as well. The usual solution is delete the 1099-INT and start over.  But, in your case there's a simple solution.  Since you're not eligible for the USSB interest exclusion, just answer no when asked if you used the bonds for education, and avoid that part of the interview.

Even when TT does it right, it's going to generate a form 8815 that says you don't qualify.  That form will not be sent to the IRS as part of your tx return. 

Since, you're not getting the interest exclusion, your entire contribution to the 529 plan should have been identified as "Basis".  None of it should have been called 'earnings", since the earnings portion (interest) is being taxed.  Be sure  the contribution was identified that way, so you don't risk being taxed twice if for some reason the 529 plan is not all used for education in the future. 

[macum54]

I followed these instructions using easy step and it doesn't ask the additional questions that lead to form 8815 being completed.  Very frustrating.  I didn't say yes to wanting adjust the interest.  I tried saying yes, but that doesn't get anywhere either.  Very frustrating.  Is there a way to simply complete form 8815 manually?

[Anonymous]

So dealing with this form is why I switched to H & R Block several years ago. Much easier to use. Good Luck