How To Cash In Savings Bonds: Mastering The Art

How To Cash In Savings Bonds: Mastering The Art

How To Cash In Savings Bonds: Mastering The Art

How To Cash In Savings Bonds: Mastering The Art

December 29, 2023

December 29, 2023

December 29, 2023

December 29, 2023

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How To Cash In Savings Bonds
How To Cash In Savings Bonds
How To Cash In Savings Bonds
How To Cash In Savings Bonds

Are you that person who received a savings bond as a gift during your childhood? Or a family member of yours was once a saver and has accumulated a few savings bonds? Maybe it’s time to cash in those savings bonds but you’re not familiar with the next steps.

If you’ve never done it before it can be a bit confusing but after reading this blog post, your doubts and any confusion will be cleared. From understanding the different types of bonds to navigating the tax landscape, let's delve into the essential steps of how to cash in savings bonds stress-free.

What Are Savings Bonds?

Let’s start with the basics. A savings bond is a debt security issued by the U.S. government to raise funds and promote savings. They are considered a low-risk investment, making them an attractive choice for individuals seeking a secure and stable financial option. Since the government guarantees the principal and interest, it can be a great way to diversify your investment portfolio.

Different Types of Savings Bonds

The two main types of savings bonds are Series I and Series EE. Series EE bonds are purchased at a discount to their face value and accrue interest over a fixed period, most times 20 years. On the other hand, a Series I bond is inflation-protected and adjusts their interest rates based on changes in the Consumer Price Index.

Key Features and Benefits Of Savings Bonds

  • Non-marketable, meaning they cannot be bought or sold on the secondary market.

  • Interest earned on savings bonds is exempt from state and local taxes

  • May be federally tax-free if used for qualifying educational expenses

Features of Savings Bonds

Are you that person who received a savings bond as a gift during your childhood? Or a family member of yours was once a saver and has accumulated a few savings bonds? Maybe it’s time to cash in those savings bonds but you’re not familiar with the next steps.

If you’ve never done it before it can be a bit confusing but after reading this blog post, your doubts and any confusion will be cleared. From understanding the different types of bonds to navigating the tax landscape, let's delve into the essential steps of how to cash in savings bonds stress-free.

What Are Savings Bonds?

Let’s start with the basics. A savings bond is a debt security issued by the U.S. government to raise funds and promote savings. They are considered a low-risk investment, making them an attractive choice for individuals seeking a secure and stable financial option. Since the government guarantees the principal and interest, it can be a great way to diversify your investment portfolio.

Different Types of Savings Bonds

The two main types of savings bonds are Series I and Series EE. Series EE bonds are purchased at a discount to their face value and accrue interest over a fixed period, most times 20 years. On the other hand, a Series I bond is inflation-protected and adjusts their interest rates based on changes in the Consumer Price Index.

Key Features and Benefits Of Savings Bonds

  • Non-marketable, meaning they cannot be bought or sold on the secondary market.

  • Interest earned on savings bonds is exempt from state and local taxes

  • May be federally tax-free if used for qualifying educational expenses

Features of Savings Bonds

Knowing When Your Savings Bonds Mature

One key thing to know on how to cash in savings bonds is its maturity date. The maturity date of a savings bond is when the bond reaches its full face value. Cashing in anytime before this date, you may miss out on some earnings because the bond would continue to accrue interest until its maturity date. If you cash in the bond after its maturity date you won’t be getting any additional interest either.

How to Find the Maturity Date of Your Bonds

Finding the maturity date is a pretty simple and straightforward process. For electronic bonds, you can use one of the online tools provided by the U.S. Department of the Treasury to find its maturity date. As for paper bonds, you can find all the necessary information on the face of the bond itself. Check the issue date and look for the series (e.g., Series EE or Series I) to determine the maturity period.

Steps to Cash In Savings Bonds

Cashing in your savings bonds follows a few steps in order to ensure you’re doing the necessary things. Whether you have physical paper bonds or electronic versions, these steps are meant to help make the process easier.

Gathering All The Necessary Information

Make sure you have all the relevant information before you start the cash-in process. These pieces of information include your social security number, the specific bond series and denomination and the owner of the bond’s name. It might seem basic but it will make your life easier and help minimize any risk of errors.

What Options Do I Have for Cashing In Savings Bonds?

The U.S. Department of the Treasury offers flexibility to bondholders when it comes to cashing in savings bonds. You can choose to redeem your bonds online through the TreasuryDirect website, in-person at financial institutions or credit unions, or by mail. Since each option comes with its own set of procedures, it's essential to select the method that aligns with your preferences and circumstances.

What Are The Required Forms and ID Needed?

When it comes to learning how to cash in savings bonds, it’s important to know which forms need to be filled out. This varies based on which cash in method you decide to go with. 

For cashing in savings bonds online, you’ll probably have to fill out different electronic forms on the TreasuryDirect platform. 

If you’re looking to cash in your savings bonds via mail-in or in-person, you’ll have to fill out specific paper forms. On top of that, you’ll need to have one or sometimes two forms of identification if you’re at a bank or credit union to verify your identity and ownership of the bonds.

Savings Bonds

Knowing When Your Savings Bonds Mature

One key thing to know on how to cash in savings bonds is its maturity date. The maturity date of a savings bond is when the bond reaches its full face value. Cashing in anytime before this date, you may miss out on some earnings because the bond would continue to accrue interest until its maturity date. If you cash in the bond after its maturity date you won’t be getting any additional interest either.

How to Find the Maturity Date of Your Bonds

Finding the maturity date is a pretty simple and straightforward process. For electronic bonds, you can use one of the online tools provided by the U.S. Department of the Treasury to find its maturity date. As for paper bonds, you can find all the necessary information on the face of the bond itself. Check the issue date and look for the series (e.g., Series EE or Series I) to determine the maturity period.

Steps to Cash In Savings Bonds

Cashing in your savings bonds follows a few steps in order to ensure you’re doing the necessary things. Whether you have physical paper bonds or electronic versions, these steps are meant to help make the process easier.

Gathering All The Necessary Information

Make sure you have all the relevant information before you start the cash-in process. These pieces of information include your social security number, the specific bond series and denomination and the owner of the bond’s name. It might seem basic but it will make your life easier and help minimize any risk of errors.

What Options Do I Have for Cashing In Savings Bonds?

The U.S. Department of the Treasury offers flexibility to bondholders when it comes to cashing in savings bonds. You can choose to redeem your bonds online through the TreasuryDirect website, in-person at financial institutions or credit unions, or by mail. Since each option comes with its own set of procedures, it's essential to select the method that aligns with your preferences and circumstances.

What Are The Required Forms and ID Needed?

When it comes to learning how to cash in savings bonds, it’s important to know which forms need to be filled out. This varies based on which cash in method you decide to go with. 

For cashing in savings bonds online, you’ll probably have to fill out different electronic forms on the TreasuryDirect platform. 

If you’re looking to cash in your savings bonds via mail-in or in-person, you’ll have to fill out specific paper forms. On top of that, you’ll need to have one or sometimes two forms of identification if you’re at a bank or credit union to verify your identity and ownership of the bonds.

Savings Bonds

What Are The Tax Considerations When Cashing In Savings Bonds?

Cashing in savings bonds can have implications for your tax liability. When you decide to cash in savings bonds, you’re required to report the interest earned as part of your taxable income for that given year. This interest is subject to federal income tax but will be exempt from state and local taxes.

Reporting Interest Income

Whether you decide to do it at a financial institution or online platform, you will be given the necessary documentation, such as Form 1099-INT, detailing the interest income. The interest you earn from the savings bonds is then reported on your annual federal income tax return. It’s important to accurately report this information to avoid any issues later down the road.

Strategies to Minimize Tax Liability

Even though the interest from cashing in savings bonds is taxed, there are ways that you can minimize your tax liability:

  • If you use the proceeds from savings bonds to pay for qualifying educational expenses, you might be able to exclude paying any taxes for that interest.

  • Take into consideration how much your overall income is and how much you’ll add to that by cashing in a savings bond. If it significantly increases your taxable income in a given year, it may be worth holding onto the bond.

Conclusion

Learning how to cash in savings bonds can be a straightforward process, however there are certain things that may come off as confusing. Just like many other financial decisions, it’s important to understand the strategizing the right way can help take your money further with your financial goals. The money from your savings bond can be used in many ways, from paying off credit card debt to being invested in stocks.

What Are The Tax Considerations When Cashing In Savings Bonds?

Cashing in savings bonds can have implications for your tax liability. When you decide to cash in savings bonds, you’re required to report the interest earned as part of your taxable income for that given year. This interest is subject to federal income tax but will be exempt from state and local taxes.

Reporting Interest Income

Whether you decide to do it at a financial institution or online platform, you will be given the necessary documentation, such as Form 1099-INT, detailing the interest income. The interest you earn from the savings bonds is then reported on your annual federal income tax return. It’s important to accurately report this information to avoid any issues later down the road.

Strategies to Minimize Tax Liability

Even though the interest from cashing in savings bonds is taxed, there are ways that you can minimize your tax liability:

  • If you use the proceeds from savings bonds to pay for qualifying educational expenses, you might be able to exclude paying any taxes for that interest.

  • Take into consideration how much your overall income is and how much you’ll add to that by cashing in a savings bond. If it significantly increases your taxable income in a given year, it may be worth holding onto the bond.

Conclusion

Learning how to cash in savings bonds can be a straightforward process, however there are certain things that may come off as confusing. Just like many other financial decisions, it’s important to understand the strategizing the right way can help take your money further with your financial goals. The money from your savings bond can be used in many ways, from paying off credit card debt to being invested in stocks.

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Hiatus may receive compensation when you click on links associated with this Hiatus Learn Center. Hiatus is not being compensated for any application, quotation, or the purchase of any financial products.


Hiatus has partnered with MyBankTracker for our coverage of savings account products. Hiatus and MyBankTracker may receive compensation from advertisers when you click on links associated with these savings account products. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MyBankTracker does not include all companies or all savings products. 


Hiatus has partnered with CardRatings for our coverage of credit card products. Hiatus and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are Hiatus' alone, and have not been reviewed, endorsed or approved by any of these entities.


Hiatus is not an insurer or insurance producer. Savvy is the licensed insurance producer supporting the Hiatus/Savvy program. All insurance information and underwriting is provided by Savvy and its licensed insurance partners.


Hiatus has partnered with AmONE for our coverage of personal loan products. Hiatus and AmONE may receive compensation when you click on links associated with personal loan products. In certain situations, compensation may impact where products appear on the site (including the order in which they appear). AmONE does not include all loan companies or all types of loan products.


You are being referred to ADVR LLC’s website ("Advisor") by Hiatus, a solicitor of Advisor ("Solicitor"). The Solicitor that is directing you to this webpage will receive compensation from Advisor if you enter into an advisory relationship or into a paying subscription for advisory services. Compensation to the Solicitor may be up to $2,000. You will not be charged any fee or incur any additional costs for being referred to Advisor by the Solicitor. The Solicitor may promote and/or may advertise Advisor’s investment adviser services and may offer independent analysis and reviews of Advisor’s services. Advisor and the Solicitor are not under common ownership or otherwise related entities. Additional information about Advisor is contained in its Form ADV Part 2A available here.

© 2024 Hiatus, Inc. All rights reserved

Advertiser Disclosure:


Hiatus may receive compensation when you click on links associated with this Hiatus Learn Center. Hiatus is not being compensated for any application, quotation, or the purchase of any financial products.


Hiatus has partnered with MyBankTracker for our coverage of savings account products. Hiatus and MyBankTracker may receive compensation from advertisers when you click on links associated with these savings account products. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MyBankTracker does not include all companies or all savings products. 


Hiatus has partnered with CardRatings for our coverage of credit card products. Hiatus and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are Hiatus' alone, and have not been reviewed, endorsed or approved by any of these entities.


Hiatus is not an insurer or insurance producer. Savvy is the licensed insurance producer supporting the Hiatus/Savvy program. All insurance information and underwriting is provided by Savvy and its licensed insurance partners.


Hiatus has partnered with AmONE for our coverage of personal loan products. Hiatus and AmONE may receive compensation when you click on links associated with personal loan products. In certain situations, compensation may impact where products appear on the site (including the order in which they appear). AmONE does not include all loan companies or all types of loan products.


You are being referred to ADVR LLC’s website ("Advisor") by Hiatus, a solicitor of Advisor ("Solicitor"). The Solicitor that is directing you to this webpage will receive compensation from Advisor if you enter into an advisory relationship or into a paying subscription for advisory services. Compensation to the Solicitor may be up to $2,000. You will not be charged any fee or incur any additional costs for being referred to Advisor by the Solicitor. The Solicitor may promote and/or may advertise Advisor’s investment adviser services and may offer independent analysis and reviews of Advisor’s services. Advisor and the Solicitor are not under common ownership or otherwise related entities. Additional information about Advisor is contained in its Form ADV Part 2A available here.

© 2024 Hiatus, Inc. All rights reserved

© 2024 Hiatus, Inc. All rights reserved

Advertiser Disclosure:


Hiatus may receive compensation when you click on links associated with this Hiatus Learn Center. Hiatus is not being compensated for any application, quotation, or the purchase of any financial products.


Hiatus has partnered with MyBankTracker for our coverage of savings account products. Hiatus and MyBankTracker may receive compensation from advertisers when you click on links associated with these savings account products. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MyBankTracker does not include all companies or all savings products. 


Hiatus has partnered with CardRatings for our coverage of credit card products. Hiatus and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are Hiatus' alone, and have not been reviewed, endorsed or approved by any of these entities.


Hiatus is not an insurer or insurance producer. Savvy is the licensed insurance producer supporting the Hiatus/Savvy program. All insurance information and underwriting is provided by Savvy and its licensed insurance partners.


Hiatus has partnered with AmONE for our coverage of personal loan products. Hiatus and AmONE may receive compensation when you click on links associated with personal loan products. In certain situations, compensation may impact where products appear on the site (including the order in which they appear). AmONE does not include all loan companies or all types of loan products.


You are being referred to ADVR LLC’s website ("Advisor") by Hiatus, a solicitor of Advisor ("Solicitor"). The Solicitor that is directing you to this webpage will receive compensation from Advisor if you enter into an advisory relationship or into a paying subscription for advisory services. Compensation to the Solicitor may be up to $2,000. You will not be charged any fee or incur any additional costs for being referred to Advisor by the Solicitor. The Solicitor may promote and/or may advertise Advisor’s investment adviser services and may offer independent analysis and reviews of Advisor’s services. Advisor and the Solicitor are not under common ownership or otherwise related entities. Additional information about Advisor is contained in its Form ADV Part 2A available here.

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© 2024 Hiatus, Inc. All rights reserved

Advertiser Disclosure:


Hiatus may receive compensation when you click on links associated with this Hiatus Learn Center. Hiatus is not being compensated for any application, quotation, or the purchase of any financial products.


Hiatus has partnered with MyBankTracker for our coverage of savings account products. Hiatus and MyBankTracker may receive compensation from advertisers when you click on links associated with these savings account products. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MyBankTracker does not include all companies or all savings products. 


Hiatus has partnered with CardRatings for our coverage of credit card products. Hiatus and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are Hiatus' alone, and have not been reviewed, endorsed or approved by any of these entities.


Hiatus is not an insurer or insurance producer. Savvy is the licensed insurance producer supporting the Hiatus/Savvy program. All insurance information and underwriting is provided by Savvy and its licensed insurance partners.


Hiatus has partnered with AmONE for our coverage of personal loan products. Hiatus and AmONE may receive compensation when you click on links associated with personal loan products. In certain situations, compensation may impact where products appear on the site (including the order in which they appear). AmONE does not include all loan companies or all types of loan products.


You are being referred to ADVR LLC’s website ("Advisor") by Hiatus, a solicitor of Advisor ("Solicitor"). The Solicitor that is directing you to this webpage will receive compensation from Advisor if you enter into an advisory relationship or into a paying subscription for advisory services. Compensation to the Solicitor may be up to $2,000. You will not be charged any fee or incur any additional costs for being referred to Advisor by the Solicitor. The Solicitor may promote and/or may advertise Advisor’s investment adviser services and may offer independent analysis and reviews of Advisor’s services. Advisor and the Solicitor are not under common ownership or otherwise related entities. Additional information about Advisor is contained in its Form ADV Part 2A available here.

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