If you cash in bonds and use the proceeds to pay for higher education expenses, you may be able to exclude the bond interest you receive from I or EE bonds on your tax return.
Qualifications:
- Issued after 1989
- The owner of the bond must be 24 years or older when the bond is issued.
- To qualify for the college tax exemption, you must purchase the bonds in your own name (not the child’s) or jointly with your spouse.
- The bonds must be redeemed to help pay for tuition and fees for college, graduate school, or vocational school for the taxpayer, spouse, or a dependent - not room and board. If only some proceeds are used to pay for qualified expenses, only that part of the interest can be excluded.
- You cash the qualifying savings bonds in the same tax year for which you are claiming the exclusion.
- Not valid on Married Filing Separate returns
Limits
The exclusion is subject to income limitations:
- $137,800 of modified AGI for joint filers (Phaseout at $167,800) as compared to $128,650 in 2022
- $91,850 for others (phaseout at $106,850) as compared to $85,800 in 2022
What information do I need to claim the exclusion in the program?
To complete the exclusion form in the program, you need the student's name, higher education institution name and address, total amount of qualified expenses paid, total amount of nontaxable scholarships, total proceeds from the bonds (principal and interest), total interest.
Where to report?
- Federal
- Income (select my forms)
- 1099-INT, DIV, OID
- Did you earn any interest from Series EE & I US Savings Bonds that you can exclude?
Keep for your records
Keep the following records to verify interest you exclude.
- Bills, receipts, canceled checks, or other documents showing you paid qualified higher education expenses in 2022.
- A written record of each post-1989 series EE or I bond that you cashed. Your record must include the serial number, issue date, face value, and total redemption proceeds (principal and interest) of each bond. You can use Form 8818, Optional Form To Record Redemption of Series EE and I U.S. Savings Bonds Issued After 1989, as your written record.