A financial investment in EE Savings Bonds can be a great idea for your future. Prior to you purchasing them you should check about the tax rules, and who may own them. 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.

These can be a good investment for your child so they can have some money towards their college fund or a vehicle when they turn of age. The interest on EE Savings Bonds are reported the year of redemption on your federal tax return. You may also elect to have the interest reported yearly, once you do this you must do this every year and it applies to all of your securities that are accrual-type securities.

According to the IRS Publication 550, if the EE Savings Bonds comes to its final maturity, interest on the bond that is earned must be reported the year of final maturity. You should amend the Federal Tax Return if possible, within the three years limit for amendments, and report the interest. If this is not possible to do, you should cash the bond in and report the interest on your return for the year you cashed it in. You can research more on the internet about savings bonds interest. Interest that is earned is exempt from local and state taxes on EE Savings Bonds.

When thinking of the future for either yourself or a loved one, then an investment into savings bonds can be a wise choice. You can either get them in paper form or electronically. When purchased electronically you can also manage them and redeem them online. When purchasing EE Bonds  on paper you buy them at half of the face value.

For example, you pay $50 for a $100 bond. The bond is not going to be worth it’s face value until it matures. When purchased electronically they are sold at face value. Example, you pay $100 for a $100 bond. These will be worth face value when you redeem them. The I Bonds are purchased for face value and can only be purchased in paper form.

When redeeming I Bonds or EE Bonds you must have them for at least one year. If you cash them in before five years there is a penalty of three months interest imposed. An example of that would be if you cash in a bond 36 months after you purchase it then you will receive the original amount you purchased it for and 33 months worth of interest.

Bonds can be cashed before the one year only in cases when it is declared a Federal Disaster, but the penalty will still apply on them. Before you cash the bonds in be sure to check and see what they are worth. You can check this online with a savings bond calculator before you go to the bank.