When purchasing eligible EE or I Savings Bonds that are issued after the year 1989, there can be education tax exclusions you may qualify for if the owner of the bond uses them to pay for higher education that qualifies and at an institution that is eligible. One tip when buying the bonds for education purposes is to buy them in small denominations. In this way it will be easier to cash in only the amount needed for college expenses that you will currently need. If you cash in more than is needed it may cause a taxable event when filing your federal taxes.

There are several requirements needed to qualify for this exclusion. There are certain income requirements you have to meet. You must file a joint return if married for the exclusion. The bond has to be in your name if it is used for your education. If used for your child’s education the child can be a beneficiary, but the owner and co-owner has to be you and/or your spouse. The education expenses have to be in the year the bonds are redeemed in. You have to be 24 years old at least when you buy the bonds.

Some of the expenses that qualify are the tuition and fees that are course related, expenses for any required course that is a part of certificate-granting or degree program, and sports, hobbies, games if they are part of the certificate program or degree. The cost for room, board, and books do not qualify. For more information on this or any other investment related material please look on the internet.

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