A questions for the tax experts (1 Viewer)

[Mark Paquette]

I was gathering all the necessary paperwork to complete my taxes this weekend. One of the forms I received from my bank was a 1099-INT for an EE Savings Bond that I cashed back in April. This was a $1,000 bond that was purchased for me by my grandparents way back when. When I cashed it in, it was worth about $1,300. So my question is about the reportable interest. Should I be paying taxes on entire sale price of bond ($1,300), which is what the bank is reporting to the IRS. Or the amount that the bond increased in value, in this case about $800 ($500 purchase price, $1,300 value when cashed).

 

[Scott Merryfield]

I would think that you would only owe taxes on the interest earned. The initial bond purchase price would be considered a gift from a family member, and you are allowed to receive these gifts tax-free (up to a specified amount, but certainly more than the $500 purchase price of the bond).

 

[SethH]

You only pay taxes on the interest.



The amount is $10,000 per year.

 

[Mark Paquette]

Thanks guys.

 

[Michael Reuben]

It's now $11,000. The increase kicked in a few years ago.

M.