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Exclusion Of Interest From Series Ee And I Us Savings Bonds: What You Should Know

Deduct the interest on those bonds you want to exclude from income. You'll calculate the interest in subtracting the bond amount from the total education expenses. Include the difference on lines 6 and 7 of Form 8815. If you're married and have to file separately, the interest may be excluded only to the extent of the taxpayer's share of the joint expenses. Example You own a 20,000 Series EE bond, and you spend 15,000 to attend college. Your education expenses of 1,950 is less than 50%, and you don't have to report the remaining 950. The amount of interest from 1,950 to 15,000 is more than 50%, so you still didn't have to report 900 (the amount less the portion of the bond amount that is your share of expenses). However, you must report the interest if you deducted it. You can deduct the interest when you figure your deduction by multiplying the interest in the amount of the bond amount that can't be counted toward your education expenses. Example You paid 10,000 as a down payment on a 20,000 Series EE bond. You want to deduct only 900. The total of all of your education expenses is 2,500. Your 900 is in addition to your 10,000 down payment. You can deduct more of your education costs, so you can't use this method. Using bonds for higher education — Education Tax Credit Education Tax Credit is a tax reward on the amount that is used for qualified higher education expenses. These expenses include tuition and fees, room, board, books, supplies, and other expenses. The credit is available on up to 2,000 of a taxpayer's income for the year (up to 5,850 for married couples). For more information, click. Exclusion of Interest on U.S. Savings Bonds This is a change from the prior edition on October 10, 2014. If you use a U.S. Savings Bond program to pay for qualified higher education expenses, you can exclude the interest earned on that bond. Generally, interest on U.S. Savings Bonds is taxable to you on your federal tax return to the same year as you paid it (i.e., the first year you are taxed) and in the following year the interest is included as income to you. If you pay interest on an international savings bond program (i.e.

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