Smart Mom Investing

Cashing in savings bonds can be a straightforward process, but it’s important to understand the various types of bonds and any implications of cashing them. When you decide to redeem your savings bonds, you can do so at most banks or credit unions. It’s wise to have your identification, such as a driver’s license or passport, readily available, as institutions may request it for verification. Before you cash in your bonds, consider the interest they have accrued and whether it might be more beneficial to keep them for a longer period. For example, Series EE bonds earn interest for up to 30 years, and if redeemed before five years, you may forfeit some of the interest earned. Checking the current value of your bonds using the U.S. Department of the Treasury’s savings bond calculator can help determine whether it’s the right time to cash them in. Additionally, be aware of the tax implications associated with cashing in your savings bonds. The interest earned on your bonds is subject to federal income tax, but may be exempt from state and local taxes. If you use the proceeds for qualified education expenses, you may also qualify for tax exemptions under certain conditions. Always consult a tax professional or financial advisor if you’re uncertain about how cashing in your savings bonds will affect your tax situation.