For the bonds to qualify, the following conditions must be met. Your problem is probably that you don't meet #1.
- The bond owner must be 24 years of age or older at the time of purchase. If a parent buys the bond and puts it in the name of a child who is under 24 years of age, the bond does not qualify.
- When savings bonds are redeemed, all funds must be used to pay off higher education expenses for the owners, their spouses, or their dependents. The Internal Revenue Service only recognizes payments made to qualified institutions where the U.S. Department of Education has established student-aid programs.
- Funds can only be used towards tuition-related expenses, including lab fees and degree-required courses. The funds may not be used to cover the costs of board, books, or recreational activities.
- The amount of tax exempt interest is based on the owner's modified adjusted gross income (MAGI). If the owner's MAGI reaches a certain threshold, they may not be eligible for this program. For joint tax filers in 2020, that threshold was $153,550. For single filers, the MAGI threshold was $97,350. Married owners are required to file joint taxes in order to receive the exemption.
