Jump to content

Savings Bonds


Middle Buffalo
 Share

Recommended Posts

I have a bunch of $200 bonds that I bought for $100 years ago. I used to have an automatic paycheck deduction that I used to purchase them, so I have a ton of them. I've looked them up, and quite a few are now worth $200 or more, even though they haven't reached their maturity date.

 

I've done some research, and from what I can tell, they can be cashed and used for education expenses to save on the tax hit.

 

Anybody know the best way to go about using them? Do I cash them and put them into a 529 plan? Should I cash them and immediately use them to pay for my son's college tuition? If so, do I put them into one of my accounts and write a check, or should I have a cashiers check made to the college?

 

A little advice is appreciated.

Link to comment
Share on other sites

Depending on your state of residence, there are tax advantages to you now for putting them into a 529 plan as well as tax advantages for your children in the future. In Indiana, you receive a 20% tax credit on 529 contributions up to $5k in contributions. For example, if you were to contribute $5k, you would receive an additional $1k back during income tax season.

 

In Illinois, I believe you can use contributions as tax deductions. For example, if you make $100k and contribute $5k, you would only be "claiming" to make $95k.

 

The tax advantages for your kids is that when they pull the money out for higher education, it will be tax-free. Furthermore, the government has been changing the law as of late in that the money can be used for a lot more, whereas in the past, it had to be used for school. I believe now it can even go toward an apartment/rent for school and a few other things.

 

Hopefully this was somewhat helpful.

Edited by soxfan49
Link to comment
Share on other sites

QUOTE (soxfan49 @ Dec 7, 2017 -> 09:37 AM)
Depending on your state of residence, there are tax advantages to you now for putting them into a 529 plan as well as tax advantages for your children in the future. In Indiana, you receive a 20% tax credit on 529 contributions up to $5k in contributions. For example, if you were to contribute $5k, you would receive an additional $1k back during income tax season.

 

In Illinois, I believe you can use contributions as tax deductions. For example, if you make $100k and contribute $5k, you would only be "claiming" to make $95k.

 

The tax advantages for your kids is that when they pull the money out for higher education, it will be tax-free. Furthermore, the government has been changing the law as of late in that the money can be used for a lot more, whereas in the past, it had to be used for school. I believe now it can even go toward an apartment/rent for school and a few other things.

 

Hopefully this was somewhat helpful.

That was my understanding. I guess I just have to keep good documentation.

 

Thanks!

Edited by Middle Buffalo
Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share

  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...