Date posted: May 8, 2009
I cashed in some savings bonds and received $500 interest. Do I have to report it?
I cashed in some savings bonds and received $500 interest. Do I have to report it?
— Submitted by Connie
Interest on U.S. savings bonds is usually taxable for federal income tax purposes and always exempt from state income taxes. Unless you have been reporting the accrued interest on the bonds annually (which most people do not), then you must include the interest in income when you redeem the bonds. Exception: If the bond proceeds are used for qualified higher education purposes for yourself, spouse, or dependent and your income is below a set amount, you can exclude some or all of the interest on redeemed bonds.
