Regarding taxes due for cashing in savings bonds, would that be done when filing taxes for the year? Is there another option?
Hello @Noelle2022 . Happy to assist!
What type of savings bond do you have? You typically need to pay taxes on the interest, but there are a few exceptions. Municipal bonds are exempt at the federal level and some states depending on the situation. US Treasuries are exempt from state and local income taxes but will be taxed federally. Corporate bonds are usually taxable.
If you sell a bond, then you would be taxed on the capital gains.
Here is a great link on bonds and how they are taxed: Guide to Investment Bonds and Taxes
If you have Series EE and Series I savings bonds, you can avoid taxes by using them to pay for college expenses. There are some qualifications you would have to meet. This link explains how to do this if you are interested: https://www.treasurydirect.gov/indiv/planning/plan_education.htm
I hope this helps and feel free to follow up if you need some clarification!!
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