Who can claim the savings bond interest exclusion?

A person who cashed Series EE or I U.S. Savings bonds issued after 1989 may be able to exclude all or part of the interest on the bonds from their income.

To take the exclusion on qualified Savings Bonds, one must: 1) have paid “qualified” higher education expenses (as defined by the IRS) for themselves, spouse or dependent, excluding room and board; 2) have a filing status other than married filing separately; and 3) have an adjusted gross income that does not exceed the phase out rules.

The savings bonds must be issued in the taxpayer’s name or jointly with their spouse. The taxpayer must also have been age 24 or older when the bonds were issued. Therefore, if parent purchases a bond in their child’s name who is under age 24, the parent will not qualify for the exclusion.

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