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are series ee bonds taxable ?

**Are Series EE Bonds Taxable?**

As a savvy investor, you may be wondering whether your Series EE bonds are taxable. In this article, we’ll delve into the tax implications of owning Series EE bonds and provide you with the information you need to know.

**What are Series EE Bonds?**

Series EE bonds are a type of savings bond issued by the US government. They are designed to provide a low-risk investment option with a fixed interest rate. The bonds are sold at face value, and the interest earned is exempt from state and local taxes.

**Are Series EE Bonds Taxable?**

The interest earned on Series EE bonds is subject to federal income tax. However, the good news is that the bonds are exempt from state and local taxes. This means that if you live in a state with no income tax, you won’t have to pay state taxes on the interest earned from your Series EE bonds.

**How is Interest Taxed on Series EE Bonds?**

The interest earned on Series EE bonds is taxed annually, unless the bond reaches final maturity. At that point, the entire interest earned is subject to taxation. You can either report the interest earned on your annual tax return or use Form 1099-INT to report the interest earned on your bonds.

**Who Owes the Tax on Series EE Bonds?**

The tax liability for Series EE bonds depends on who owns the bond. If you own the bond, you’ll be responsible for paying the federal tax on the interest earned. However, if you’re a non-resident alien, you may not be subject to federal tax on the interest earned from your Series EE bonds.

**How to Report and Pay Tax on Series EE Bonds**

To report the interest earned on your Series EE bonds, you’ll need to complete Schedule B (Form 1040) and attach it to your annual tax return. You can also use Form 8815 to report the exclusion of interest from your Series EE and I bonds.

**Conclusion**

In conclusion, Series EE bonds are subject to federal income tax, but exempt from state and local taxes. Understanding the tax implications of owning a Series EE bond is essential to ensure you’re reporting and paying the correct amount of tax. By doing so, you can avoid any potential penalties or fines.

**Additional Resources**

For more information on the tax implications of Series EE bonds, you can visit the Treasury Department’s website or consult with a tax professional.