- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
After you file
Probably not.
As you probably realize, the interest you get when cashing in the bond is only tax-free for education if the student is the owner, spouse, or the dependent of the owner of the bonds. So if you cash them in and give the proceeds to your niece, you will still owe the tax.
It is possible to transfer ownership of an EE bond to a different person, but this is treated as a cashout and reissue. You will owe tax on the interest so far, but you niece would not owe tax on interest when she cashes them out for education.
So this only really makes sense if your niece is young and has a long way until school. Let's say she's 10 and the bonds are 5 years old. You would pay tax now on 5 years worth of interest, and then when she cashes them out at 18, she would not owe tax on the next 8 years of interest.
But if she is a student now or soon, there is no way to cash them out in such a way that you won't owe tax on the income, unless she is your dependent.