golftrek
Recycles dryer sheets
My mother has a safe-deposit box full of Series EE bonds bought back in 1985. She has never cashed any in or paid any tax on the bonds. They are earning a good interest rate. I understand that they will reach final maturity and cease earning interest in 2015. As I understand it, mother will owe federal tax (but not state tax) on the bonds in 2015. The way I read the IRS rules, mother will have to pay tax on the interest in 2015 whether or not she actually cashes in the bonds.
I have suggested that mother go ahead and redeem some of her bonds this year and the rest in 2015 so as to spread out the tax burden. Mother called me today and said that the person who does her taxes (he is not a CPA) said she will not have to pay the tax until she actually redeems the bonds even if this is after their final maturity date. He says she could just redeem a few of the bonds each year over the next 10 years or so and spread out the taxes.
Won't mother owe taxes on all the interest in 2015 even if she does not redeem the bonds? If she does not redeem the bonds in 2015, I assume she
will not get a 1099 but I think she will still owe the federal taxes. Of course, the bonds will stop earning interest after 2015. Mother does not need the income from the bonds at this time.
Any suggestions how to reduce or spread out the taxes? These bonds have earned a lot of interest over the years, so she is going to owe quite a bit of tax.
Thanks, Jo Ann
I have suggested that mother go ahead and redeem some of her bonds this year and the rest in 2015 so as to spread out the tax burden. Mother called me today and said that the person who does her taxes (he is not a CPA) said she will not have to pay the tax until she actually redeems the bonds even if this is after their final maturity date. He says she could just redeem a few of the bonds each year over the next 10 years or so and spread out the taxes.
Won't mother owe taxes on all the interest in 2015 even if she does not redeem the bonds? If she does not redeem the bonds in 2015, I assume she
will not get a 1099 but I think she will still owe the federal taxes. Of course, the bonds will stop earning interest after 2015. Mother does not need the income from the bonds at this time.
Any suggestions how to reduce or spread out the taxes? These bonds have earned a lot of interest over the years, so she is going to owe quite a bit of tax.
Thanks, Jo Ann