- If you have a local bank account and it accepts savings bonds, you might ask if it will accept yours.
Paper bonds
Your bank or credit union should be able to cash in your paper savings bonds. If you’re going to a financial institution where you’re not a member or customer, check to see if they’ll cash your bond before you go.
Confirm what documents you’ll need to bring with you by contacting the bank. Here’s what you should bring with you in general.
It’s important to remember that bonds can’t be cashed by just anyone. Savings bonds can only be cashed by the bond owner or co-owner, which includes “survivors,” or those identified on the bond who received ownership after the original owner died. You are not the registered owner (a savings bond is nontransferable) and cannot cash in the bond if you purchased it through an auction site like eBay.
If the child is too young to sign the payment request and the child lives with the parent or the parent has legal custody of the child the parent may cash in the child’s savings bond.
Anyone else who wants to cash in a bond must show proof of legal authority to do so.
You’ll sign each bond and receive the cash value at the bank. The bank will either hand you a 1099 tax form or mail it to you before the end of the tax year after you’ve cashed in your bond.
Paper bonds can also be redeemed through the mail. To cash in by mail, obtain an FS Form 1522 from the US Department of Treasury, have your signature certified, then mail the form to the address shown on the form.
Electronic bonds
By connecting into your TreasuryDirect account and setting up a direct payment to your bank or savings account, you can cash in your electronic bonds. Within two business days, the cash amount may be credited to your bank account.
How do you redeem paper bonds?
Bonds made of paper If you cash at a bank, the paperwork is provided. The bank may give you the form right away or mail it to you laterpossibly after the year in which you cash the bond. If you cash with Treasury Retail Securities Services, the form will be mailed to you in January of the following year.
Is it possible to deposit a savings bond at an ATM?
Can I use an ATM or a night drop to deposit my savings bonds? Any savings bond transaction, whether depositing or cashing, must be completed in person. The teller processing the transaction must witness the endorsement of the bond, and acceptable identification must be presented.
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.
Is it possible to cash paper bonds online?
Paper savings bonds, unlike bonds purchased online, cannot be redeemed using the Treasury Direct platform. You must instead take your paper certificates to a bank or other financial institution that processes Treasury Department redemptions.
To convert paper bonds to electronic bonds, you can use the Treasury Direct SmartExchange facility. The bonds can be redeemed online once they’ve been converted to electronic form. You must wait at least one year after purchasing the bonds before redeeming them as part of bond ownership. If you redeem them in fewer than five years, you will lose three months’ interest.
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 procedure for converting paper bonds to electronic bonds?
When you do a SmartExchange, you exchange your paper savings bonds for electronic savings bonds kept in TreasuryDirect, an online system that allows you to access your Treasury assets at any time.
- If you don’t already have one, sign up for a TreasuryDirect account. To get started, simply fill out our simple online application.
- To create your Conversion Linked Account, click the icon. The Account Info page for that account will appear after you do so.
- Select the ManageDirect tab from the drop-down menu. A menu titled “Manage my Conversions” can be found on the ManageDirect page.
- Click the “How to Convert My Paper Bonds” link from the “Manage My Conversions” menu. This page includes step-by-step directions to help you complete the task. We recommend printing this page so you can refer to it when you’re getting started.
Gather your Series E, EE, and I savings bonds and sort them according to their titles and connectors (“OR,” “POD,” or “beneficiary”). Grouping your bonds by registration will make the process of entering the bonds you want to convert much easier.
If you need to access your Conversion Linked Account at a later time, go to your principal Account Summary page and look for “My Converted Bonds” in the account listing under “Linked Accounts Information.”
You will no longer need to keep track of paper securities once you have completed the SmartExchange.
See “Convert Your Paper Savings Bonds Using SmartExchange” for additional information and other benefits.