Just a quick question about savings bonds..

[copperman]

Just a quick question about savings bonds

 

ok here we go. My Great Grand Mother buys 2 savings for my family every Christmas. Now when I got the new ones from this past Christmas in the mail I noticed that the SSN on them for my wife had 1 number wrong in it. I was wondering if this would cause a problem around 20-25 years from now when it is time to cash them and reinvest them. Also, whom would I contact about this problem should I call my great gram and let her know?

 

any info would be great thanks

[DC Dawg]

No, it will not.

 

You will be asked for the proper TIN (taxpayer identification number) at the time of redemption and you will pay the taxes then. The only thing the TIN is good for before maturity is to pay taxes on the interest as it accrues. If you're not going to pay the taxes as you go along, don't worry about it now.

 

Scott

[copperman]

ty Scott for info!

[just-john]

us savings bonds are tax free yes? no? maybe ?

[cpm9ball]

us savings bonds are tax free yes? no? maybe ?

 

I don't think they are tax-exempt. The only bonds I'm familiar with that are tax-exempt are municipal bonds. There may be others, but U.S. Savings Bonds are not one of them. To be sure, Scott could probably tell you.

 

Chris

[thebeav]

Savings bonds are tax deferred. When redeemed, you pay Federal tax on the profit. They are Satate tax free.

 

Paul

[DC Dawg]

Savings bonds are tax deferred. When redeemed, you pay Federal tax on the profit. They are Satate tax free.

 

Paul

You can pay the taxes on the interested paid annually at the current rates. If you think the tax rate or the tax rate on your income will go up, that may be beneficial. Otherwise, you pay the taxes when you cash in the bond. Bonds are not necessarily "tax deferred." They are classified as capital gains and you pay your tax when the profit is realized.

 

EE series bonds require taxes paid when they are cashed. HH series bonds may have their proceeds rolled over to new HH bonds without paying taxes. However, HH series bond are market adjusted and has no guarantee maturity like EE series bonds. It is possible for HH bonds will not be worth face value when matured--HH bonds are tied to the national debt and market traded/adjusted.

 

Most people will pay the taxes on maturity because of the paper work involved with paying annually. There are bond funds that will take care of this for you, but their fees may not be worth it if your holdings are not large enough. YMMV and you should ask your tax adviser which is best for you.

 

Oh... and not all savings bonds are tax free. EE series bonds are. HH series are not. However, there are legal ways around that (e.g., IRA investment, etc.). Again, YMMV and ask a tax professional!

 

NOTE: I am not a tax professional but I have investments in various US bonds and have worked with the government on systems that help manage these investments. Everyone's situation is different and you should ultimately consult a tax profession for definitive advice.

 

Scott