A tax question re: EE Bonds & Roth IRA

[WootWoot]

Several months ago, a family member gave me an EE savings bonds, which I cashed in. The amount of interest on it is something in the area of $17,000. I can't find the thread, but I did ask here what my projected tax on it would be and I have set that money aside.

In the meantime, I just opened a Roth IRA with Vanguard and invested $5K for tax year 2016. Tax question: Is the $5K something I can claim on my tax return, and will it "cross out" the money I will owe for the interest on the bond?

Thanks!

[Catbert]

Nope, no immediate tax impact for Roth contribution.  It goes in after tax but grow tax free and comes out tax free.

A traditional IRA is a tax deduction (assuming your income isn't too high) and could *offset* your EE bond earned interest.

[WootWoot]

My income is around $35K, married filing jointly. Oh well...Thanks for replying!

[etselec]

You may be able to recharacterize your Roth contribution to Traditional, which would let you deduct it on your taxes. Worth looking into, especially if the $ pushes you into a higher tax bracket.

[WootWoot]

It won't bump me into a higher tax bracket, thankfully. I'll look into switching, though.