Rules for cashing in
U.S. savings bonds
How and where do I cash my Series E savings bonds? -- Vickie
You should be able to cash those bonds at your
local bank; you just need to show proper identification and prove
that you're entitled to cash them. By the way, these rules also
apply to cashing in Series I savings bonds, not just the Series
the bonds are in your name
If the bonds are in your name, you're automatically entitled to
cash them at most financial institutions; all you have to do is
show proper identification. If you've been an active customer for
at least six months, it's a slam dunk; your account is your identification
and the bank should cash as many as you want with no questions asked.
For Series I and E savings bonds purchased after Feb.1, 2003, you
must hold them for one year before cashing them in.
If you're not a bank customer, you'll have to show your driver's
license or some other form of identification, and they'll only let you cash $1,000
worth of bonds at a time. The bank should accept a driver's license as identification,
but just to be on the safe side call ahead and ask.
You can also set up an online account with the U.S.
Department of Treasury's TreasuryDirect
Web site. Here you'll be able to buy savings bonds by debiting
a checking or savings account, manage and redeem your bonds.
the bonds are in someone else's name
If you don't own the bonds, you
need to prove that you have a right to cash them. For example, if the bond owner
died and you are the beneficiary, you'll need to identify yourself and bring a
certified copy of the owner's death certificate to the bank.
the bonds belong to your children and they're very young, you can sign for them.
Let's pretend your name is Vickie Doe, and your 3-year-old daughter, Lottie Doe,
owns the bonds. You would write the following on the back of each bond:
certify that I am the parent of Lottie Doe with whom Lottie Doe resides (or to
whom legal custody has been granted). She is 3 years old and is not of sufficient
understanding to make this request.
-- Vickie Doe on behalf of Lottie Doe"
it's always a good idea to check with the bank to find out what its particular
requirements are before you do anything. Visit the U.S. Treasury's Web site for
more information on Series
E savings bonds.
Think before you
cash in those bonds
If your Series E bonds were issued before May 1,
1995, they're earning either 4 percent or 6 percent a year. If you're lucky enough
to be holding the 6 percent variety, you may want to hang on to them; that kind
of interest on a tax-deferred, no-risk bond is hard to come by today. To find
out what the bond is earning and what it's worth, plug your numbers into the U.S.
Another thing to think about is how much
interest income you'll have to report to the IRS the year you redeem the bonds.
Slapping a large chunk of income on a tax return can have serious consequences.
It can push you into a higher tax bracket, make part of your Social Security taxable,
prevent you from making an IRA contribution and reduce or eliminate the amount
you can deduct for personal exemptions and itemized deductions. Talk to a tax
professional if you think this could happen to you.
ROSEN has a master's degree in finance, with a specialization in accounting, from
the Kellogg Graduate School at Northwestern University in Evanston, Ill. Rosen
has more than 15 years of experience in the financial arena, serving in Illinois
and Florida as a certified public accountant, financial consultant, expert witness
and educator. She is owner of Dorothy Rosen, CPA, a public accounting firm that
serves individuals and small businesses.