Series EE savings bonds maturing after 30 years...now what?

[CardsFan]

This thread has served as a reminder to me to cash in the EE paper bonds I have, over the next few years. It is only $12k face value, but 60 bonds. Over half have hit the "magic number" of achieving face value independent of interest rate.

[harllee]

For my mother's EE savings bonds, they matured around 2018. Mother did not redeem them or report them on her tax return. When I finally get them redeemed (have not figured out how to do so yet) do I report them on mother's tax return in the year of redemption? Or do I amend her 2018 return and report the income for 2018? All very confusing.

[Telly]

All of our EE bonds have been/are in paper. The year we cash them in is the tax year that they get reported. We never tried any "pay the tax as you go" method.

It didn't matter what year they matured, only what year we actually cashed the particular bonds in. In other words, it did not become a taxable event until we "sold" (cashed them in) them.

[cat4ever]

Quote:

Originally Posted by zinger1457 Once the bonds mature I'm pretty sure you will get a tax bill whether you cash them in or not.

I had some paper EE bonds that I'd forgotten about, and most had been matured for 1-5 years before I cashed them in. I didn't get any notices and didn't pay taxes on them in the interim, just all at once when I cashed them all in at a local bank.

[harllee]

Thanks Telly and cat4ever--that is what I plan to do. We will report the bonds on mother's tax return the year we cash them in. If the IRS penalizes her we will beg forgiveness due to her age and health.

[Montecfo]

Quote:

Originally Posted by harllee Thanks Telly and cat4ever--that is what I plan to do. We will report the bonds on mother's tax return the year we cash them in. If the IRS penalizes her we will beg forgiveness due to her age and health.

I do not think this is a problem. Your 1099 will be for the year on which they are cashed in, so everything should sync up.

[Montecfo]

Quote:

Originally Posted by harllee Not so for paper bonds. I have discovered that my mother has a bunch of EE bonds that matured several years ago and she has never gotten a tax bill for those. I know that these should be cashed in and the tax paid but I have not yet figured out how to accomplish this. I have taken over mother's finances under her Power of Attorney. The local band and credit union tell me that they cannot cash savings bonds with a Power of Attorney. According to my research in order for me to cash them for her at Treasury Direct she will have to sign a special Power of Attorney to me that has to be medallion guaranteed. At this point she is not healthy enough to do this. The bonds may have to remain uncashed until her death when I can cash them in as her Executor.

Does she have an account at the bank? If so they can cash them and deposit to her account. No POA needed.

I did this recently for my son. Bond in his name, but in my hands.

[Which Roger]

I have a stack of about 80, $50 bonds, that I purchased one per month thru my employer many years ago. They are starting to mature, and one will mature each month for the next several years, so I have been sending batches in to Treasury Direct to convert to E Bonds. I should have done this a long time ago, to get rid of the stack of paper in the fire box and put everything on auto pilot. Now all I have to do is periodically transfer the proceeds to my bank account with a few mouse clicks. Just to be safe, I take pictures of them (a couple dozen with one click of the camera) so I have proof in the unlikely case that they are lost. I sent only 3 bonds in the first batch to see how the process works, then sent the rest in bigger batches since I liked what I saw.

[Ian S]

Quote:

Originally Posted by Montecfo I do not think this is a problem. Your 1099 will be for the year on which they are cashed in, so everything should sync up.

Honestly, I think you would have more issues if you paid tax on the uncashed bond in the year it matured (no 1099 issued) and then have to wave your hands to explain the discrepancy between the tax already paid previously and the 1099 issued at the time you actually cash the bond in.

[harllee]

Quote:

Originally Posted by Montecfo Does she have an account at the bank? If so they can cash them and deposit to her account. No POA needed. I did this recently for my son. Bond in his name, but in my hands.

Yes mother has an account a Wells Fargo and a local credit union but they say she has to appear in person and sign each bond in front of a bank officer. Right now she is not physically able to do this.

[pb4uski]

Quote:

Originally Posted by harllee Yes mother has an account a Wells Fargo and a local credit union but they say she has to appear in person and sign each bond in front of a bank officer. Right now she is not physically able to do this.

Might this help? https://www.treasurydirect.gov/forms/sav0105.pdf

If you already have a certified copy of the power of attorney then she wouldn't need to sign anything as I read it, but you would have to redeem the bonds by mail using Form 1522 and have the proceeds deposited into her bank account.

[Gill]

Quote:

Originally Posted by lucky penny 6. On my tax return, is the bond treated like an investment & reported on Schedule D?

Don't you wish. It is not a capital gain but rather interest income treated as ordinary income.
Gill

[harllee]

Quote:

Originally Posted by pb4uski Might this help? https://www.treasurydirect.gov/forms/sav0105.pdf If you already have a certified copy of the power of attorney then she wouldn't need to sign anything as I read it, but you would have to redeem the bonds by mail using Form 1522 and have the proceeds deposited into her bank account.

I have mother's power of attorney but here in North Carolina POAs are no longer recorded so I don't have a certified copy. I will have to see if I can get it recorded and get a certified copy. And for the Form 1522 that I will have to sign, will I have to get medallion guarantee or I have read they have changed that and now only need a notary?

[pb4uski]

Quote:

Originally Posted by harllee I have mother's power of attorney but here in North Carolina POAs are no longer recorded so I don't have a certified copy. I will have to see if I can get it recorded and get a certified copy. And for the Form 1522 that I will have to sign, will I have to get medallion guarantee or I have read they have changed that and now only need a notary?

The alternative is to complete Form 5188, which your mom would have to sign, but only once rather than for every bond.

Quote:

To authorize an attorney-in-fact to act on behalf of a bond owner, please do either of the following: • Submit a certified copy of the power of attorney authorizing the attorney-in-fact to do so. The document must: o Have a legible stamp or seal of the certifying officer o Either be signed within the past two years or contain a durability clause • Complete Durable Power of Attorney for Securities and Savings Bonds Transactions (FS Form 5188)

Quote:

CERTIFICATION – Each person whose signature is required must appear before and establish identification to the satisfaction of an authorized certifying officer. The signatures to the form must be signed in the officer's presence. The certifying officer must affix the seal or stamp which is used when certifying requests for payment. Authorized certifying officers are available at financial institutions, including credit unions, in the United States. Examples of acceptable seals and stamps:  The financial institution’s official seal or stamp, including: Signature Guaranteed seal or stamp; Endorsement Guaranteed seal or stamp; Corporate seal or stamp (a corporate resolution isn’t required); or Issuing or paying agent seal or stamp (including name, location, and four-digit identification number or nine-digit routing number)  The seal or stamp of Treasury-recognized Signature Guarantee Programs or other Treasury-approved Medallion Programs

The thing that is unclear to me is the "certifying officer" but this link provides some info: https://www.treasurydirect.gov/indiv...ch/sigcert.htm

Who can certify signatures in the U.S.	Evidence of certifying individual's authority
(1) Officers and employees of depository institutions, such as banks	(i) We require the institution's seal or signature guarantee stamp.
(ii) If the institution is an authorized paying agent for U.S. Savings Bonds, we require a legible imprint of the paying agent's stamp.
(2) Institutions that are members of Treasury— recognized signature guarantee programs (for security transfers only)	We require the imprint of the signature guarantee stamp, i.e., the STAMP, SEMP, or MSP stamp for members of the Securities Transfer Agents Medallion Program, the Stock Exchanges Medallion Program, or the New York Stock Exchange Inc. Medallion Signature Program.
(3) Officers and employees of corporate central credit unions, Federal Land Banks, Federal Intermediate Credit Banks and Banks for Cooperatives, the Central Bank for Cooperatives, and Federal Home Loan Banks	We require the entity's seal.
(4) Commissioned or warrant officers of the United States Armed Forces, for signatures executed by Armed Forces personnel, civilian field employees, and members of their families	(i) We require a statement that the person executing the assignment is one whose signature the officer is authorized to certify under our regulations.
(ii) The certifying official's rank must be shown.
(5) A judge or clerk of a U.S. court	We require the seal of a U.S. court.
(6) Other persons as designated by the Commissioner or Deputy Commissioner of Fiscal Service	Evidence is determined by our procedures.

[harllee]

The government has made it almost impossible for an elderly person to cash in a paper bond, way too complicated. She does not need this money, I will probably just want to do it as part of her estate after her death.

[pb4uski]

Agree... the movement of commerce to online has left a lot of people behind... its almost impossible today to operate without some online capability... which freezes out some people like my 91yp DM who doesn't have internet at all or my 68yo neanderthal friend who is scared to do anything online.

[harllee]

Quote:

Originally Posted by pb4uski Agree... the movement of commerce to online has left a lot of people behind... its almost impossible today to operate without some online capability... which freezes out some people like my 91yp DM who doesn't have internet at all or my 68yo neanderthal friend who is scared to do anything online.

Yes my 90 year old mother has no clue about the internet. At age 70 I am pretty internet savvy but dealing with mother's bonds has been a real challenge for me.

[MrEd]

dont have to be cashed if you dont wish to pay the taxes. you can just hold on to them and let those who inherit them deal with them

[pb4uski]

Quote:

Originally Posted by MrEd dont have to be cashed if you dont wish to pay the taxes. you can just hold on to them and let those who inherit them deal with them

And I'm sure that they will love you for doing that.

I'm trying to arrange my financial affairs to make things easier for my heirs, not harder.

Depending on the amounts involved the risk is that they may end up saying eff-it... and the money goes to waste... not what I want.

[harllee]

Quote:

Originally Posted by MrEd dont have to be cashed if you dont wish to pay the taxes. you can just hold on to them and let those who inherit them deal with them

Once they are matured the EE bonds cannot be transferred. If my mother still owns her bonds at her death, they will have to be cashed by her estate and the estate will have to pay the tax, most likely at a higher rate.