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Savings Bonds - Cash out or hold
Old 12-10-2014, 08:02 AM   #1
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Savings Bonds - Cash out or hold

This is the last year I will have tuition expenses to write off against Savings Bonds. It is also the first year my income has been low enough to take advantage of this program. We are not talking a lot of money here. Tax savings of less than $800. The problem is the bonds average about 4% in interest. I am perpetually in the 25% tax bracket and will move to the 28% tax bracket at 70. The savings now vs additional interest at 70 is about a wash. If I keep the bonds to maturity I would come out ahead if interest rates stay low for a long time. So what would you do?

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Old 12-10-2014, 08:18 AM   #2
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In a similar situation I cashed enough to offset taxes. Since less tax now is so powerful, I'm surprised your math says you'll eventually come out ahead by holding. Are you sure you are comparing the after-tax value of the bonds if you cash them in the future?
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