Frequently Asked Questions
Savings Bonds FAQs
- May I purchase savings bonds at the credit union?
- May I cash savings bonds at the credit union?
- What is the difference between EE and I Bonds?
- Can EE Bonds be exchanged for I Bonds?
- When can I cash (redeem) an EE or I Bond if I need the money?
- How are lost, stolen, or destroyed EE or I Bonds replaced?
- How do I find out what my Bonds are worth?
- What is the current interest rate on the EE and I Bonds?
- What is the Education Tax Exclusion?
- How do I qualify for the Education Tax Exclusion?
- What educational expenses are eligible?
No. The U.S. Department of Treasury declared that as of January 1, 2012 all over-the-counter sales of paper savings bonds would cease at all financial institutions. Electronic savings bonds can be purchased at Treasury Direct, a secure web-based system operated by the Bureau of Public Debt.
Yes. This service is offered at all of our People First branch locations.
The biggest difference is the rate you receive on your bonds. Rates for EE Bonds are calculated as 90% of 6-month averages of 5-year Treasury Securities market yields, while rates for I Bonds are calculated by combining fixed rates of return and semi-annual inflation rates based on the Consumer Price Index for all Urban Consumers (CPI-U).
No, but you can cash the EE Bonds and use the proceeds to buy I Bonds. The interest earned on the EE Bonds must be reported on your Federal income tax return for the year in which they were cashed.
You can cash your Series EE or I bonds anytime after 12 months. You receive the original purchase price plus interest earnings. EE and I Bonds are meant to be longer-term investments; if you redeem an EE or I Bond within the first 5 years, you'll lose your last 3 months interest. For example, if you redeem an I Bond after 18 months, you'll receive the first 15 months of interest.
The Bureau of the Public Debt is authorized to replace lost, stolen, or destroyed EE or I Bonds. You can file a claim by writing to: Bureau of the Public Debt, Parkersburg, West Virginia 26106-1328. You'll need to complete Form 1048.
Keep records of your EE and I Bond serial numbers, issue dates, and the social security or taxpayer identification numbers in a safe place. This information will help speed up the replacement process.
It's good to know what your bonds are worth before you redeem them. TreasuryDirect brought to you by the U.S. Department of the Treasury Bureau of the Public Debt has a Savings Bond Calculator to help you determine the current redemption value of your bonds.
Earnings rates for I bonds and fixed rates for EE bonds are set each November 1 and May 1. They can be viewed on TreasuryDirect's website brought to you by the U.S. Department of the Treasury Bureau of the Public Debt.
The savings bond education tax exclusion permits qualified taxpayers to exclude from their gross income all or part of the interest paid upon the redemption of eligible Series EE and I Bonds issued after 1989, when the bond owner pays qualified higher education expenses at an eligible institution.
- Qualified higher education expenses must be incurred during the same tax year in which the bonds are redeemed.
- You must be at least 24 years old on the first day of the month in which you bought the bond(s).
- When using bonds for your child's education, the bonds must be registered in your name and/or your spouse's name. Your child can be listed as a beneficiary on the bond, but not as a co-owner.
- When using bonds for your own education, the bonds must be registered in your name.
- If you're married, you must file a joint return to qualify for the exclusion.
- You must meet certain income requirements.
- Your post-secondary institution must qualify for the program by being a college, university, or vocational school that meets the standards for federal assistance (such as guaranteed student loan programs).
Qualified educational expenses include:
- Tuition and fees (such as lab fees and other required course expenses).
- Expenses that benefit you, your spouse, or a dependent for whom you claim an exemption.
- Expenses paid for any course required as part of a degree or certificate-granting program.
- Expenses paid for sports, games, or hobbies qualify only if part of a degree or certificate program.
Note: The costs of books or room and board are not qualified expenses.
The amount of qualified expenses is reduced by the amount of any scholarships, fellowships, employer-provided educational assistance, and other forms of tuition reduction.
You must use both the principal and interest from the bonds to pay qualified expenses to exclude the interest from your gross income. If the amount of eligible bonds you've cashed during the year exceeds the amount of qualified educational expenses paid during the year, the amount of excludable interest is reduced pro rata.
Example: Assuming bond proceeds equal $10,000 ($8,000 principal and $2,000 interest) and the qualified educational expenses are $8,000, you could exclude 80 percent of the interest earned, which would equal $1,600. (.8 x 2000 = $1,600)
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Your savings are federally insured to at least $250,000 by the National Credit Union Administration and backed by the full faith and credit of the U.S. Government.