16 Feb / US Savings Bonds
Schultz & Associates, CPA is a metro Detroit accounting, auditing and income tax preparation and advisory firm. If your in of income tax Royal Oak may not have the right local firm you are looking for.
US. Savings Bonds can be a good way to defer taxes. Some US. Savings Bonds allow the interest and value to accrue until they are cashed in. Allowing the taxpayer to create current value without creating a current income tax liability. Interest on most US Savings Bonds will continue to accrue interest even after they have reached their face value. However, keep in mind that most US Bonds stop accruing interest after a period of time. For instance for some bond the interest stop accruing after 20 years. So take a look at your bonds and be sure that they are still making you money.
Many states in the US do not tax interest on US Saving Bonds. And the federal government does not tax interest of savings bonds if they are used for qualified higher education expenses.
If bonds are given to minor children there is also the opportunity to elect to report the income on savings bonds even if they are not cashed in. The bond interest would be amortized over the bond life. And because many minor children do not have enough income to create any income tax liability, the amortized interest often results in zero tax liability. Conversely, when bonds are cashed and all of the income on the accrued interest is finally reported, the result is often tax.
Tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.