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Level 1
posted Feb 22, 2025 12:20:46 PM

Savings Bonds deposited into 529 plan -exempt interest

I am a grandparent who cashed in some matured savings bonds and used them to open a 529 account in my name with me as the beneficiary within the 60 day window.  Because it appears that I cannot exempt the taxes on my tax return if I just set up an account for my grandchild and rolled over the proceeds, I followed the process of : "A grandparent could list himself or herself as the beneficiary on a 529 as owner —then redeem the bonds and contribute the proceeds to the 529 within 60 days of the redemption. After that, you could change the beneficiary on the 529 plan to the grandchild’s name."

My question is when I enter the bonds 1099 INT in the Wages and Income section on TT - Do I enter the grandchild's name as the (final) student info, or do I enter my name as the original owner/beneficiary for TT to exempt the taxes in my calculations?

 

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1 Replies
Expert Alumni
Feb 22, 2025 12:47:14 PM

You will enter your name as the student to have the bond interest exempt.  When it is transferred to Form 8815 it shows that the student must be either the taxpayer, spouse, or a dependent on the return.