Redeemed Savings Bonds In 2016 Or Holding Older Bonds? Read This Before Filing Your Taxes

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If you have redeemed or are holding any U.S. Savings Bonds that have reached final maturity in 2016, read this:

Paper Savings Bonds: If you redeemed bonds in 2016, you should have received a 1099-INT for all of the interest earned either on the spot (at the bank or financial institution), or mailed to you early in 2017. Contact the financial institution where you redeemed the bonds if you have not received the form. If you mailed in bonds to the Treasury Department for redemption and haven’t received the 1099-INT, call 844-284-2676.

Electronic Savings Bonds: Print out the 1099-INT from your Treasury Direct Account for bonds redeemed in 2016. This includes any paper bonds that were converted to electronic format. Paper 1099-INT’s will NOT be mailed for e-bond redemptions.

According to the IRS when a savings bond reaches final maturity – regardless if the bond has been cashed in – the owner is required to report all of the interest earned (unless previously reported annually) on a Federal Income Tax Return for that year.

Matured paper savings bonds do NOT automatically receive a 1099-INT. When electronic bonds reach final maturity, the owner is notified of the automatic bond sale and they must print out the 1099-INT from their Treasury Direct Account.

  • Failure to report the interest income could result in IRS fines and penalties, depending on final maturity date, and the amount of interest earned.
  • If the bonds are well beyond their final maturity dates, and you have not reported the interest, you may be able to file amended tax returns.
  • Consult with a financial or tax professional regarding rules and regulations. Refer to IRS Publication 550.

U.S. Savings Bonds are subject to Federal Income Tax and free from state and local income taxes.

  • The difference between the purchase price and redemption value of a savings bond is considered report-able interest.
  • There is no special tax rate for savings bonds.
  • Savings bond interest earned amounts should be reported as “ordinary income” on one’s Tax Return in the year the bond was redeemed or reaches final maturity, whichever occurs first.
  • Regardless of any previous tax reporting, the 1099-INT will include ALL of interest earned since the bonds issuance.
  • If you reported interest annually in the past, include copies of all applicable prior Federal Income Tax Returns, indicating the amount of interest previously reported.

Received bonds as a gift or an inheritance? Determine if any interest was previously reported. While reporting interest annually is not a common practice, you (or your heirs) can avoid double taxation. Keep copies of all applicable prior tax returns and consider alerting any co-owners, beneficiaries and heirs about any previously reported interest.

If you have previously reported interest from savings bonds in your or your child’s name, refer to IRS Publication 550 and consult with a tax professional regarding interest reporting requirements.

Understanding interest earned amounts, final maturity dates and the potential tax implications before redeeming will allow for better financial planning. Use an online complimentary savings bond calculator to obtain exact bond values, interest earned amounts and maturity dates.

Investors often forget about bonds that they redeemed earlier in the year. Additionally, bonds can be worth a lot more than their face value, which is often a pleasant surprise when cashing in. However, having to report a large amount of interest income in any given year can create an unpleasant tax situation, especially for those in a lower-income tax bracket. Once a savings bond has been cashed in, there is no going back.

About SavingsBonds.com:

SavingsBonds.com’s complimentary calculator provides cash in values, interest rates and a personalized, printable, color-coded, Savings Bond Inventory Report along with a “What This Means To You” explanation. For ongoing savings bond management & updated bond values via unique monthly e-Bond Statements, try a free 14-day trial of the SavingsBonds.com VIP Membership which includes a helpful Cash-In-Report©

By Jackie Brahney, SavingsBonds.com, http://www.SavingsBonds.com jbrahney@savingsbonds.com @savingsbondsgal

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Three Things Every Savings Bond Owner Needs To Know

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Millions of U.S. Savings Bonds are tucked away in closets, drawers and safety deposit boxes and forgotten about.

Many bond owners have no idea what their bonds are worth or how to properly manage them despite the availability of online calculators and bond management services.

Here are three things every savings bond owner should know to maximize their investment and avoid common, costly mistakes.

1. Savings Bonds Are Not Created Equal.

Various series of bonds, such as A-D, E, EE, I, H and HH have been sold since 1935. The series, month and year of issue will determine the rules, regulations, interest rates, maturity dates and investment performance for that bond.

When interest rates are announced each May and November, those rates only apply to new bond purchases during that six-month period. That is not usually the rate older, previously issued bonds are earning. Sounds confusing?  It is for most.

2. Paper EE Bonds Can Be Worth A Lot More Than The Amount Printed On Them.

When a paper bond has reached face value – the dollar amount printed on the bond – it has reached its initial maturity.  They will continue to earn interest beyond their face value until they reach final maturity, which is usually 30 years from the issue date.

Once a bond reaches final maturity it will no longer earn any interest. Holding onto matured bonds is like giving Uncle Sam an interest free loan.

Since January 2012, savings bonds have been sold at face value, in electronic format only. The only way to obtain a (Series I) paper bond is via a Federal Income Tax refund.

Misunderstanding bond values often results in redeeming too many bonds when needing to raise cash. Investors also arbitrarily grab bonds from the bottom of the pile. They often mistakenly cash in the highest interest rate performers and hold onto the worst performers in their portfolio.

3. Cashing In Savings Bonds Creates A Taxable Event. The difference between the purchase price and cash-in value is considered report-able interest, which must be included on a Federal Income Tax Return.

Redeeming a substantial number of bonds that have earned a lot of interest in any given year could also create unpleasant tax surprises, especially for those on social security.

When redeeming, interest earned amounts over $10 will be reported on a 1099-INT, which will be either issued on the spot or mailed (in the first few months of the following year) by the financial institution that cashed in the bond(s). Electronic bond owners must go to their Treasury Direct Account and print out the 1099-INT.

IRS rules indicate that the total interest earned amounts on any savings bonds that have reached final maturity – even if they have not been cashed in  – should be reported on ones Federal Income Tax Return, in the year the bond(s) reached final maturity.

Savings Bonds Are Confusing. They should be taken out of storage, valued and properly managed.

A complimentary savings bond calculator which includes a detailed Bond Inventory Report©, provides cash in values, interest rate performance, total interest earned amounts, maturity and tax information for paper E, EE and I Savings Bonds. An easy to understand, ‘what this means to you,’ explanation helps investors make smart financial decisions about their bonds. Once educated, investors can confidently choose the best (lower interest earning) bonds to redeem first, and hold onto the better performers.

Whether holding or redeeming bonds, having basic financial information can help investors maximize their investment, avoid losing money and prevent unfavorable tax situations.

About SavingsBonds.com:

SavingsBonds.com’s complimentary calculator provides cash in values, interest rates and a personalized, printable, color-coded, Savings Bond Inventory Report along with a “What This Means To You” explanation. For ongoing savings bond management & updated bond values via unique monthly e-Bond Statements, try a free 14-day trial of the SavingsBonds.com VIP Membership which includes a helpful Cash-In-Report©.

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Why You Should Do A Financial Check Up On Your Savings Bonds

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Most investor have no idea what their U.S. Savings Bonds are worth or the interest rates they are earning.  If you own savings bonds, pull them out of your drawers or safety deposit boxes and use a complimentary online calculator and do a financial check up. Here’s why:

Savings Bonds Do Not All Perform The Same

Since 1935, various savings bonds have been sold including A-D, E, EE, I, H and HH. The series, month and year of issue determines the rules, interest rates and regulations applicable to each bond.

SavingsBonds.com’s complimentary calculator, provides current cash in values, along with a detailed, bond-by–bond, color-coded, personalized SavingsBonds.com Savings Bond Inventory Report and a “What This Means To You” explanation.

In addition to bond values, an Inventory Report indicates current interest rates along with pertinent maturity and taxation issues for each bond. Important information needed to make educated investment decisions.

Whether you plan to hold onto some or all of your bonds, creating an online savings bond portfolio or becoming a SavingsBonds.com VIP Member can help you better organize, manage and understand what your bonds are worth and how they are performing.

Additionally, a VIP Membership provides monthly summary emailed Savings Bond Statements that provide current cash in values, monthly growth, taxation issues, and up to 3 month in advance “Alerts.”

“Alerts” notify investors about bonds that are, or about to, reach final maturity and will no longer earn any interest.

 A Savings Bond Statement is essentially a quick, one page snapshot of the bond portfolio values, along with important fianncial details giving investors peace of mind, just by opening monthly emails.

The SavingsBonds.com Cash-In Report eliminates guesswork and provides important taxation issues when needing to cash-in some or all of the bonds. Total interest income amounts are provided, which should be included on a Federal Tax Return, if any bonds are redeemed.

Optional Daily Bond Tips to further educate and even entertain are also provided.

To get started, first time users should go to SavingsBonds.com calculator and enter the series, denomination and issue date found on the front of each series E, EE and I savings bond to create the complimentary bond portfolio and printable, SavingsBonds.com Savings Bond Inventory Report. For ongoing savings bond management and 24/7 access to reports and monthly Bond Statements, sign up for the SavingsBonds.com VIP Membership for as little as $5.95 per year.

By Jackie Brahney, jbrahney@savingsbonds.com, @savingsbondsgal

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Money Resolution: Skip Starbucks For $1,000 Worth Of Savings Bonds 

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Standing in line on my last visit to Starbucks© my new years resolution light bulb went off. Like millions of others, mine included the typical list of losing weight, incorporating regular gym visits and trying to save more money.

It was probably the jolt of caffeine from the vanilla grande latte that helped me realize that I could stash away at least a $1,000 worth of U.S. Savings Bonds by giving up my regular visits to Starbucks©.

With my new plan I could still enjoy my favorite coffee and more importantly, satisfy my caffeine cravings.

However, after recently scrolling (and cringing) through waaay too many pages of my last credit card statement, saving more money seemed like a really important resolution to tackle. On the car ride home from my coffee run, I developed the plan.

I pulled out my old coffee maker, cleared a spot on my kitchen counter, and added my favorite coffee – including Starbucks© and flavored creams to my grocery list.

I did the math. By making my daily cup or two of joe at home, instead of purchasing them, I would save at least $25 a week. That would be enough to purchase a $100 savings bond every month.

Since I didn’t trust myself waiting a month to purchase a $100 bond (shoe sales are my financial kryptonite), I decided that purchasing a weekly $25 Series I Savings Bond (the minimum electronic purchase amount currently allowed) would be a smarter way for me to stay on track. I even accounted for weeks with birthdays, vacations and holidays when I likely would need some extra spending money and skip the bond purchase.  I

I wrote down 40 “buy bond” reminders on my calendar would result in $1,000 worth of savings bonds in 2015. That’s a lot of (coffee) beans!

The Series I Savings Bonds that I am scheduled to purchase will current earn 2.76% (the rate for new I bonds purchased through April, 2017), which is a lot more attractive than my current savings or checking account rates.

More importantly, purchasing savings bonds in small denominations would be a simple and nearly systematic way for me to save.

Putting the extra “coffee”  money in my checking or savings account would be too tempting to access, and likely sabotage my resolution plan. While I don’t plan to use the new savings, I can cash in the bonds after they have been held for at least twelve months (although a 3 month interest penalty applies for bonds redeemed in first 5 years).

With my new resolution, as an added bonus, I would also save some time and gas driving to purchase the coffee. If I really miss my favorite coffee joint, I could treat myself to a cup or two on the weekends, which happens to be on the way to the gym.

SavingsBonds.com’s complimentary Calculator provides current values, interest rates, financial, timing and tax information via a color-coded, Savings Bond Inventory Report© including a “what this means to you” explanation. For savings bond management services & updated values via monthly e-Bond Statements with important alerts, sign up for a free 14 day trial of SavingsBonds.com’s unique VIP Membership.

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3 Reasons You Should Start Managing Your Savings Bonds Now

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If you have paper Savings Bonds stashed away in drawers or safety deposit boxes, one of your new years resolutions should be to pull them out, dust them off and learn what they are worth and how to maximize your investment. Here are our top 3 reasons you should start managing your savings bonds:

Bond Management Helps Avoid Common Financial Pitfalls

Irreversible, often costly financial mistakes are made due to a lack of basic savings bond information. Once a bond is redeemed, there is no going back.

Many paper bond owners mistakenly think all savings bonds essentially perform the same and earn the same rate of interest, or worse, have no idea the interest rate that their bonds are earning.

Other common problems include; improper registration, holding onto bonds earning zero interest and also mistakenly cashing in the highest interest rate earners rather than the poorest performers.

A bond management service, such as SavingsBonds.com’s VIP Membership, helps investors avoid these common, often costly mistakes via online services, reports and monthly emailed bond statements which are not available elsewhere.

By opening monthly Bond Statements investors can get a quick snapshot summarizing their toal bond portfolio value, monthly investment growth, maturity “Alerts” and important taxation amounts if redeeming. From the statement, they can link to their detailed, color-coded bond-by-bond Inventory Report indicating current cash in values, current interest rates, along with maturity and taxation information.

Bond Management Builds Investor Confidence

Since 1935, various types of savings bonds have been sold including A-D, E, EE, I, H and HH.

The bond series and month and year of issue determines the rules, interest rates and regulations applicable to each bond.

Most investors purchase bonds for retirement or education purposes. But the reality is that most people wind up cashing in some or all of their savings bonds early and often arbitrarily to cover rainy day expenses, such as bills, vacations. Many also redeem their bonds when faced with an unexpected financial emergency.

Knowing what ones bond portfolio is worth and which bonds to redeem first and the potential tax liability helps reduce investor stress.

Not knowing current cash-in values and interest rate performance often results in redeeming the wrong bonds, or in many cases, more bonds than was necessary.  This often results in investors having to report more interest income on their Federal Income Tax Return than expected. Having to report too much interest income could also negatively affect social security benefits for some.

A Cash-In Report, which is part of the SavingsBonds.com VIP Membership, eliminates redemption guesswork and suggests the best bonds to redeem in ones portfolio along with important interest earned amounts that will need to be reported on a tax return.

Additionally, optional Daily Bond Tips are emailed to inform, educate and even entertain investors.

Bond Management Offers Peace Of Mind With Quick and Easy Bond Replacement In Case Of Loss

Thefts, fires, floods and natural disasters occur daily. Unfortunately, paper bonds are often destroyed or lost as a result. When bond information is stored in a reputable online management service, getting those bonds replaced – or the cash equivalent – is much quicker and easier.

Whether holding or cashing in, creating an online savings bond portfolio and opening monthly Bond Statements can help investors better manage and understand what their bonds are worth, how they are performing and learn important taxation issues before they redeem. By just having some basic bond knowledge, it is easier for investors to make better financial planning decisions and avoid forfeiting money to Uncle Sam.

To get started, access  SavingsBonds.com calculator , which provides current cash in values, interest rates, financial, timing and tax information via a color-coded, Savings Bond Inventory Report along with a “what this means to you” explanation. For bond management services which include monthly Bond Statements which provide updated portfolio values along with important maturity and tax Alerts, sign up for a free 14 day trial of SavingsBonds.com’s unique VIP Membership.

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Bah Humbug To Savings Bonds As Holiday Gifts

Savings bonds used to be a great, go-to holiday gift. They were easily purchased on the spot at a local bank, often given to grandchildren, much to the delight of practical parents.

When savings bonds went electronic, consumers said bah humbug to buying them as holiday gifts.

For years, all that was required to purchase a savings bond as a gift for another individual was a name.

Years later, bonds could still be purchased at banks and financial institutions, however, a gift certificate was provided at the time of purchase which could be presented to the recipient. The actual bond was mailed weeks later to them. Those days are gone.

As of January, 2012, the government eliminated the ability to purchase over the counter (OTC) paper savings bonds at local banks or financial institutions.

Purchasing a savings bond now requires the purchaser and the recipient have a Treasury Direct Account.  If the bond is a gift for a minor, you must set up a minor linked account, to a guardian or parent, which requires that they have a Treasury Direct account.

Suffice to say, it’s complicated, especially for grandma and grandpa. Unfortunately, buying savings bonds has become too much of a hassle.

The Treasury Department indicated they were eliminating paper bond sales as a cost savings effort. Adding,  “it will save American taxpayers approximately $70 million over the first five years.”

January 2017, marks the fifth year of selling only electronic savings bonds. Overall savings bond sales have been dropping for years. There are several reasons why. However, the elimination of paper bonds definitely added to the demise of bond sales.

Hopefully Uncle Sam will come up with an easier way to purchase savings bonds, especially to give as gifts. It would be nice to see the American iconic investment back on the top of gift lists.

 

SavingsBonds.com’s complimentary Calculator provides current values, interest rates, financial, timing and tax information via a color-coded, Savings Bond Inventory Report© including a “what this means to you” explanation. For savings bond management services & updated values via monthly e-Bond Statements with important alerts, sign up for a free 14 day trial of SavingsBonds.com’s unique VIP Membership.

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Unique And Clever Last Minute Holiday Gift

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Searching for unique last-minute holiday presents? A SavingsBonds.com VIP Membership is the ultimate gift for every savings bond owner on your list.

The SavingsBonds.com VIP Membership  – not available elsewhere – includes monthly emailed Savings Bond Statements informing investors of their current savings bond values, investment growth, and important “Alerts” which indicate bonds that are about to mature and stop earning interest, and potential tax implications.

From the monthly Bond Statements, investors can link to a personalized, color-coded, detailed Savings Bond Inventory Report which provides bond-by-bond details, including current values, interest rate performance, timing and taxation information along with a “what this means to you” explanation that simplifies it all. The five-year VIP Membership is only $29.95 and available through December 31, 2016.

The VIP Membership also includes (optional) daily bond tips and strategies on how to avoid losing money, paying unnecessary taxes and insider information to help investors maximize their investment.

The $29.95 holiday SavingsBonds.com VIP Membership includes:

  • Five years full access to SavingsBonds.com VIP Membership services
  • Unlimited number of paper savings bonds valued
  • 24/7 access to personalized, color-coded, detailed, Savings Bond Inventory Report including a “what this means to you” explanation
  • Monthly summary emailed SavingsBonds.com Bond Statements
  • Educational, interesting Daily Bond Tips (optional)
  • Cash-In Report – suggests best bonds to redeem when cashing in

To order the SavingsBonds.com VIP Membership, call Jane Zanni at 732-280-4024 Monday through Friday, or email JZanni@savingsbonds.com.  Once the order is processed, SavingsBonds.com will email you the information on how to set up the account, which can be be printed out and presented to the recipient.

SavingsBonds.com VIP Memberships require an email address and internet access. Visa, MC and Discover are accepted.

Forget the fruitcake and typical boring holiday gifts. Be remembered every month with a unique and useful gift that will also be appreciated long after the holidays are over.

SavingsBonds.com’s complimentary Calculator provides current values, interest rates, financial, timing and tax information via a color-coded, Savings Bond Inventory Report© including a “what this means to you” explanation. For savings bond management services & updated values via monthly e-Bond Statements with important alerts, sign up for a free 14 day trial of SavingsBonds.com’s unique VIP Membership.

By: Jackie Brahney, Marketing Director, SavingsBonds.com www.SavingsBonds.com jbrahney@savingsbonds.com Twitter: SavingsBondsgal

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