EE Savings Bonds Cashing & Paying tax – Deceased owner

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  • #1784
    pattycake
    Participant

    At tax time, my boyfriend always files a Federal Form 1040EZ. However, a few weeks ago his mom died, and they discovered paper EE Savings bonds, in her name & then payable on death to my boyfriend. There are over 1000 bonds, yes 1000, all are mainly 200 face value. Many are 30 years or older. He probably will divide them up between his siblings, but he wants to make sure that before giving the funds to the siblings that money is put aside to pay the taxes. We are unaware of what kind of tax liability he will have, we typically use Turbo Tax. Was a little confused cause I heard some say the interest is taxable, but not quite sure how you declare the face values? Will the bank let him know what all the bonds are worth with the interest? And do we use that amount & list that as income on the tax return? Assuming we cant use 1040 EZ this year

    #1789
    kaneohe
    Participant
    #1790
    kaneohe
    Participant

    You can use the tool above to calculate the current values of the bonds. You don’t need to enter the serial number but it might be good to number them 1-1000+ so you can track them. You pay taxes
    on the interest (not face value) and the bank will send you a
    1099-INT tax form which will show you the taxable interest to be reported. The bank will do similar calculations but it might be
    good to do some yourself to be sure the bank is doing it correctly.

    Note that interest is posted only at certain times. I believe a
    bond issued in Dec posts interest on Dec.1 and June 1 each yr.
    Check to be sure. If you cash them on Nov 30, you will lose the
    6 mos. of interest that would have posted on Dec 1.

    I believe final maturity is 30 yrs so you might want to cash those first since they aren’t earning interest any more.

    Last yrs 1040EZ said maximum interest that could be entered was
    $1500. No big deal…..just use the regular 1040.

    #1791
    kaneohe
    Participant

    actually 1040EZ no longer available.

    #1795
    pattycake
    Participant

    Thank you for taking the time to reply. I appreciate your fast response.

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