Savings Bonds For Wedding: Can I Cash Them?

US savings bonds are a government-backed investment that can be cashed in for a variety of reasons, including paying for a wedding. These bonds can be purchased for as little as $25 and earn interest over a specific time period, typically reaching full maturity after 30 years. While some banks and credit unions may offer this service, it is not available at all financial institutions. To cash in a savings bond, individuals must be listed as the owner or co-owner and provide valid identification. It is important to note that there is a penalty for cashing in savings bonds within the first five years of ownership.

How much are savings bonds worth?

Savings bonds are a government-backed, reliable investment that earns interest, reaching full maturity after 30 years. The value of a savings bond depends on several factors, including the type of bond, its denomination, and the date it was issued.

The US Department of the Treasury currently sells two types of savings bonds: the EE and I series. Both series have different interest rates, which are either fixed or change with inflation. Series E/EE bonds earn a fixed rate of interest for up to 30 years, while Series I bonds earn interest based on a combination of a fixed rate and an inflation rate. Series H/HH bonds are no longer being issued but can still be redeemed. These bonds are different from the other series because you pay the face value and receive interest payments by direct deposit to your checking or savings account every six months until maturity or redemption.

To determine the value of your savings bonds, you can use the savings bond calculator on the TreasuryDirect website. This calculator will ask for the series, denomination, bond serial number, and issue date of your bond. It will then provide you with the current value of your bond. Additionally, if you have electronic series EE or I savings bonds, you can log into your TreasuryDirect account and check the value under the "Current Holdings" tab.

It's important to note that savings bonds can be cashed in after a single year, but there is a penalty for cashing them within the first five years. Most savings bonds will stop earning interest or reach maturity between 20 to 30 years. Therefore, it is generally beneficial to wait until full maturity before redeeming them to maximize your earnings.

Where can I cash them in?

US savings bonds can be cashed in at a bank or through the US Department of the Treasury's TreasuryDirect website. Not all banks offer this service, and many only provide it if you are an account holder. Some banks, such as PNC Bank and TD Bank, require you to be an account holder for a year before cashing a savings bond. It is recommended to contact your financial institution before visiting a branch as some banks may not cash all types of bonds. For example, Regions Bank does not allow you to cash bonds in the name of a guardian, trustee, or other representative of an estate, nor can you cash bonds if you are acting as a power of attorney. Additionally, you likely cannot cash damaged or altered bonds anywhere.

If your bank cannot cash your paper savings bond, you can redeem it online at TreasuryDirect or at a financial institution that will cash savings bonds for non-account holders. In most cases, you will need to provide two forms of identification. If you are the owner or beneficiary of a bond that does not list your current name, you will need proof of your name change, such as a marriage certificate, driver's license, or Social Security card.

For electronic savings bonds, you can log in to your TreasuryDirect account and follow the instructions to transfer funds to your checking or savings account via direct deposit.

If you have a Series HH savings bond, you cannot cash it in at a bank or other financial institution. Instead, you must mail it to the Treasury Retail Securities Services along with a specific form.

What documents do I need?

To cash in a savings bond, you will need to bring the paper bond and one or two current forms of identification to a bank or credit union. A driver's license is one example of a valid form of identification. If you are the owner or beneficiary of a bond that does not list your current name, you will need proof of your name change, such as a marriage certificate or Social Security card. If you are cashing in a bond worth more than $1,000, you will need to have your signature certified. This can be done by a notary public.

If you are cashing in an electronic bond, you can do so online through your TreasuryDirect account. You will need to click on the Manage My Securities tab and then click Redeem Securities. The cash will generally be transferred to your checking or savings account within two business days.

Is it worth it to cash them in?

It is worth cashing in savings bonds if you need the money for a wedding or other expenses. US savings bonds are a government-backed, reliable, and safe investment. They are not subject to state or local income taxes, but you will need to pay federal income tax on the interest earned.

Savings bonds can be cashed in after one year of ownership, but there is a catch. If you cash in the bond before five years, you will lose the last three months' worth of interest. So, while it may be tempting to cash in your savings bonds early, it is usually more beneficial to wait until they have reached full maturity, which is generally after 30 years. This way, you can take advantage of compound interest and maximize your returns.

To determine if it is worth cashing in your savings bonds, you can use a savings bond calculator. This tool will help you calculate the current value of your bonds and make an informed decision about whether to cash them in or continue holding them.

If you decide to cash in your savings bonds, you can do so by mail or through direct deposit with the US Department of the Treasury's TreasuryDirect website. Some banks and credit unions may also be able to cash savings bonds, but this varies by financial institution. Be sure to bring the necessary documentation, such as proof of identity and ownership of the bonds, when redeeming your savings bonds.

Do I pay taxes when cashing them in?

Yes, you will need to pay taxes when cashing in your savings bonds. The interest on savings bonds is subject to federal income tax. However, it is not subject to state or local income taxes.

There are two ways to report the interest earned from savings bonds:

• Defer reporting interest income until the bond is redeemed or fully matured, whichever comes first.
• Report the interest and pay the tax due on it each year.

If you cash in your savings bond at a bank, the bank is responsible for getting you a 1099-INT form. They may give or mail you the form as soon as you cash the bond or wait until the following January. If you cash in your paper savings bond with the U.S. Department of the Treasury, they will mail you the form in January of the following year.

After redeeming your bonds, you will receive an IRS Form 1099-INT, reflecting your taxable gain. You must report the interest as income in the taxable year in which you redeemed the bonds. If your total interest for the year is more than $1,500, you must complete Schedule B (Form 1040) and attach it to your Form 1040-SR, U.S. Tax Return for Seniors. If your total interest is not more than $1,500 for the year, report the savings bond interest with your other interest on the "Interest" line of your tax return.

There is an exception to paying taxes on the interest earned from your savings bonds. If you use the proceeds from qualified bonds to pay for higher education expenses for yourself, your spouse, or your dependent, some or all of the interest may be excluded from your gross income.

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