Before making any financial investment you should always get the most recent information as possible. One investment you can make for the future is the purchasing of savings bonds. There are some restrictions in order for you to be able to own savings bonds. You must reside in the United States, if you do not live in the United States you have to a citizen and have a U.S. Address on record, regardless of where you reside you can own them if you are a civilian employee, and minors are allowed to own them.

There are rules for taxes on savings bonds. Interest which is earned on I Bonds are subject to federal tax. If you wish to do so you can defer this until final maturity, redemption, or another taxable disposition, whatever one of these happens first. These bonds are also subject to inheritance, estate, gift, and other excise tax, for both state and federal. There are different ways for you to report the interest you earn on you I Savings Bonds.

This interest should always be added with the other income from interest on your federal tax return. One way to report the interest is cash basis. This is when you defer the interest until redemption, maturity, another taxable disposition, whatever one comes first. Another way to report it is an accural basis. This is where you would report the interest yearly. If you decide t do it this way you must continue to report it annually. When doing this for one that is in a child’s name this is an advantage.

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