savings bonds

[TAX]

Client cashed savings bond. Got 1099 for interest. Is this taxable? It was used for education purposes.

Thanks!

[S T]

Some Rules

Here are 7 rules

Rules to Qualify for Education Tax Exclusion on Savings Bonds
There are 7 rules the goverment requires be forfilled prior to being able to qualify for education tax exclusion for US Savings Bond:

1.Qualified higher education expenses must be incurred during the same tax year in which the bonds are redeemed
2.You must be at least 24 years old on the first day of the month in which you bought the bonds
3.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 an Owner or Co-Owner
4.When using bonds for your own education, the bonds must be registered in your name
5.If you are married, you must file a joint return to qualify for the exclusion
6.You must meet certain income requirements - income requirements for education tax exclusion for US Savings Bonds - listed below
7.Your post-secondary institution must qualify for the program by being a college, university, or vocational school that meets the standard for federal assistance (such as guaranteed student loan programs)

here is a link http://www.savingsbonds.com/bond_bas...ings-bonds.cfm

Sandy

[RitaB]

Also

If the interest qualifies, you have to figure the nontaxable part (cause they made it tougher than in sounds when you're buying the bonds) on Form 8815. The instructions to that form will be helpful as well.

I would also complete Form 8818, which is not attached to the return, but is good for the client and preparer records.

Edit: I might just attach it to the return, on second thought, cause they ignored my LSE the first time I ever encountered one, and I wound up resolving the issue by sending them the worksheets they didn't want attached.