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Learning, Sharing, and Teaching => Taxes => Topic started by: WootWoot on October 20, 2016, 05:53:52 PM

Title: Tax on EE bonds
Post by: WootWoot on October 20, 2016, 05:53:52 PM

Can someone help me figure this out? I'm not very good at even simple arithmetic.

I received a EE bond from a family member. The interest is $15,000. DH and I are in the 15% tax bracket. I know I have to pay federal tax only on the interest. Any idea how much the tax will be on this interest?

Title: Re: Tax on EE bonds
Post by: seattlecyclone on October 20, 2016, 06:53:12 PM

Assuming this interest wouldn't bump you into the next tax bracket, the tax would be $15,000 * 15% = $2,250. If it does bump you into the next bracket, part would be taxed at 15% and part would be taxed at 25%. In any case it shouldn't be more than 25% of $15,000, or $3,750.

Title: Re: Tax on EE bonds
Post by: WootWoot on October 23, 2016, 09:58:50 AM

Thank you very much for your help!

Title: Re: Tax on EE bonds
Post by: WootWoot on November 07, 2016, 11:56:56 AM

Just thought of something regarding this. If I made a maximum contribution to a Roth IRA, that might offset some of the taxes, right?

Title: Re: Tax on EE bonds
Post by: seattlecyclone on November 07, 2016, 12:22:24 PM

Nope, Roth IRA contributions are made with post-tax funds, meaning they don't affect your taxable income one bit. A traditional IRA contribution might be what you're looking for, but be aware that there are income limits for the IRA deduction that depend on your family status and also on whether you have a retirement plan through your employer.

Title: Re: Tax on EE bonds
Post by: WootWoot on November 07, 2016, 01:26:25 PM

Thanks, seattlecyclone! I do have a 403(b) at work.

Title: Re: Tax on EE bonds
Post by: TomTX on November 10, 2016, 07:27:54 PM

If it is spent on higher education, you may be able to avoid the tax.

https://www.treasurydirect.gov/indiv/planning/plan_education.htm

Title: Re: Tax on EE bonds
Post by: WootWoot on November 13, 2016, 10:55:28 AM

Thanks--but at the moment, I have no plans for higher education. I'm in a lucky position to be working for a college and get free tuition.

Title: Re: Tax on EE bonds
Post by: TomTX on November 13, 2016, 12:12:59 PM

Quote from: WootWoot on November 13, 2016, 10:55:28 AM

Thanks--but at the moment, I have no plans for higher education. I'm in a lucky position to be working for a college and get free tuition.

Free tuition, or reimbursed tuition?

Any fees they don't cover?

Title: Re: Tax on EE bonds
Post by: WootWoot on November 13, 2016, 12:46:11 PM

I mean reimbursed tuition.

I'm done with school for the moment. After two unsuccessful attempts at grad school, I'm putting my energies elsewhere. :)

Title: Re: Tax on EE bonds
Post by: TomTX on November 13, 2016, 12:54:37 PM

Quote from: WootWoot on November 13, 2016, 12:46:11 PM

I mean reimbursed tuition.

I'm done with school for the moment. After two unsuccessful attempts at grad school, I'm putting my energies elsewhere. :)

I'm not a CPA, but reimbursed tuition sounds like you had education expenses to me. You spent the money. (Or someone else in that situation did)

Title: Re: Tax on EE bonds
Post by: WootWoot on November 13, 2016, 03:23:56 PM

Yes, I did have fees that were not paid by my employer. However, they were more than a year ago (2015) and so I don't think the monies from a bond cashed in 2016 will be of much use in terms of lowering my taxes. thanks, though.