Series EE & I Savings Bonds
U.S. Series EE savings bonds issued after 1989 or Series I saving bonds are another tax-advantaged way to save for college.
Advantages Disadvantages The rules for using savings bonds for education can be complicated. To learn more about using savings bonds for educational expenses, you should read the Bureau of Public Debt's frequently asked questions on education and savings bonds. The Bureau of Public Debt's Web site also provides information on the latest rates for Series EE and Series I savings bonds and how to buy saving bonds directly from the federal government.
Previous Section | Next Section | Top | Home
Backed by the full faith and credit of the United States government, the interest from these bonds is tax free if used for qualified higher education expenses. Interest on Series EE and I savings bonds also is usually exempt from state and local taxes.
The full interest exclusion is only available to married couples filing jointly with modified adjusted gross income of less than $83,650 and for single filers with modified adjusted gross income of less than $55,750 in 2001. The interest exclusion is phased out if your modified adjusted gross income is between $83,650 and $113,650 for joint filers and between $55,750 and $70,750 for single taxpayers. Regardless of your income, married couples filing separately cannot take advantage of this savings bond program. You can learn more about the Educational Savings Bond Program in IRS Publication 970: Tax Credits for Higher Education.
©2004. NASD. All rights reserved. NASD is a registered trademark of NASD Inc.