Yes, interest payments on HH bonds must be reported as interest income.
every year on your federal income tax return This is a non-transferable interest.
Income taxes imposed by the state or local governments. The Treasury Department publishes an interest income statement.
(Form 1099-INT from the Internal Revenue Service)
each year by January 31st, demonstrating the interest you earned the previous year.
You can also owe taxes on deferred interest.
“Is there any tax liability when I cash HH bonds?” is answered below.
What is your tax rate on HH bonds?
Is the interest on HH bonds taxable? The interest you make on your HH bonds is taxable at the federal level, but not at the state or municipal level.
What happens when HH bonds reach their maturity date?
The bond’s face value was reimbursed to the investor upon maturity. Interest income from Series HH savings bonds must be recorded in the tax year in which it is received, but it is exempt from state and local taxes.
When you cash in your savings bonds, do you have to pay taxes?
Taxes can be paid when the bond is cashed in, when the bond matures, or when the bond is relinquished to another owner. They could also pay the taxes annually as interest accumulates. 1 The majority of bond owners choose to postpone paying taxes until the bond is redeemed.
What is the purpose of Series HH savings bonds?
Every six months, HH bonds pay interest. The bond’s value remains unchanged. When you bought the bond, you paid face value, and when you cash it, we pay you face value.
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What is the distinction between an EE and an HH bond?
HH bonds pay current interest every six months at a rate set at the time of purchase. The interest rate resets to the current HH rate on the bond’s tenth anniversary, and the bonds continue to pay for another ten years. Fixed interest rates are also paid on EE bonds issued after May 2005. On May 1 and November 1 of each year, this rate adjusts for new bonds. The bonds earn interest until they reach full maturity, which is 30 years, but you only get it when you redeem them.
When I cash in my savings bonds, will I receive a 1099?
On January of the following year, 1099-INTs are posted in TreasuryDirect. Use the ManageDirect page’s URL.
If you cash at a bank, the paperwork is provided. The bank may give you the form right away or mail it to you later, maybe after the year in which you cash the bond has ended.
If you cash with Treasury Retail Securities Services, the form will be mailed to you in January of the following year.
What is the value of an HH bond?
The face value of an HH bond is equal to its face value. If the bond says $500, it was purchased for $500 and now has a value of $500.
You cannot cash a savings bond that you find in someone else’s possession or that you purchase on an internet auction site. Savings bonds are not transferable, sellable, or tradeable.
See “Death of a Savings Bond Owner” if you inherit a bond through the death of the bond owner.
Is it possible to exchange EE bonds for HH bonds?
Owners of Series EE and E bonds will no longer be able to swap them for HH bonds after the close of business on August 31, and owners of matured HH/H bonds will no longer be able to reinvest their holdings in HH bonds.
When cashing in savings bonds, how do I avoid paying taxes?
Cashing your EE or I bonds before maturity and using the money to pay for education is one strategy to avoid paying taxes on the bond interest. The interest will not be taxable if you follow these guidelines:
- The bonds must be redeemed to pay for tuition and fees for you, your spouse, or a dependent, such as a kid listed on your tax return, at an undergraduate, graduate, or vocational school. The bonds can also be used to purchase a computer for yourself, a spouse, or a dependent. Room and board costs aren’t eligible, and grandparents can’t use this tax advantage to aid someone who isn’t classified as a dependent, such as a granddaughter.
- The bond profits must be used to pay for educational expenses in the year when the bonds are redeemed.
- High-earners are not eligible. For joint filers with modified adjusted gross incomes of more than $124,800 (more than $83,200 for other taxpayers), the interest exclusion begins to phase out and ceases when modified AGI reaches $154,800 ($98,200 for other filers).
The amount of interest you can omit is lowered proportionally if the profits from all EE and I bonds cashed in during the year exceed the qualified education expenditures paid that year.