If you’ve recently uncovered a paper savings bond, this episode of The Agent of Wealth Podcast is for you! In it, Marc Bautis, Founder and Wealth Manager at Bautis Financial, breaks down the need-to-know facts about savings bonds.
In this episode, you will learn:
- What savings bonds are, including the types of savings bonds.
- How to calculate the value of your savings bonds.
- How to redeem your savings bonds.
- The tax implications of redeeming/selling your savings bonds.
- And more!
Resources:
Treasurydirect.gov | How to Calculate the Value of Your Savings Bonds | Tax Considerations for I Bonds | How I Bonds Can Hedge Against Inflation | Bautis Financial: 7 N Mountain Ave Montclair, New Jersey 07042 (862) 205-5000

Welcome back to The Agent of Wealth Podcast. This is your host, Marc Bautis. On today’s show we are going to talk about savings bonds. Not just what they are, but what are your options if you have an old one.
When someone buys a savings bond today, everything is done online. You open an online account – just like you would any online brokerage account – and the bonds are held in the account. But years ago, it was common to receive gifts in the form of savings bonds issued by the US Treasury. These were most likely physical, paper copies of the bonds that had to be stored somewhere safe.
Recently, I’ve had people approach me after they did some spring cleaning where they uncovered paper bonds from many years ago. They wanted to know what they should do with them. Another area that’s put a spotlight on savings bonds is the rising popularity of I Bonds (or Inflation bonds), which I’ll also cover in this episode.
What Are Savings Bonds?
Savings bonds are a way for Americans to purchase U.S. government debt. Savings bonds are considered to be one of the safest, low-risk investments that you can buy, because they are backed by the U.S. Government who can guarantee that you’ll make your money back, plus a little bit of interest, without the potential of losing money. Most have a face value between $50 to $10,000.
Savings bonds stop earning interest after 30 years, and they must be owned for at least one year before they can be redeemed, and five years before they can be redeemed without any penalty.
What Type of Savings Bond Do You Have?
There are three types of savings bonds: Series E, Series EE and Series I. The money in any of these bonds is exempt from state taxes, but the interest earned is taxable by the federal government.
Series E: The government stopped issuing these types of bonds in 1980, so if you have a Series E bond, you’re sitting on something that no longer exists. These bonds had a 40-year maximum if issued before November 1965 and a 30-year maximum afterward. If yours was issued in 1978, for example, it would have matured in 2008.
Series EE: The Series EE bonds served as a replacement for the E bonds, and these earn different interest rates depending on the issue date. EE bonds issued between May 1997 and April 2005 earn veritable interest; those purchased after May 2005 earn fixed interest. Series EE bonds can earn interest for up to 30 years.
Series I: Series I bonds are designed to protect against inflation with a combined fixed rate and a semiannual inflation rate that’s based on the consumer price index.
Related: How I Bonds Can Hedge Against Inflation
How to Calculate the Value of Your Savings Bonds
Once you’re ready to calculate the value of your savings bong, there’s some information you’ll need to know, including your bond’s:
- Type
- Denomination
- Serial number
- Issue date
When you have that information, you can use the Savings Bond Calculator on TreasuryDirect to find out how much your bond is worth today.
Data from the calculator may pleasantly surprise you. As an example, a $50 bond issued in August 1982, for which someone would have paid $25, is now worth 146.90.
How to Redeem Your Savings Bonds
Paper savings bonds can generally be redeemed at your bank or credit union. The TreasuryDirect website doesn’t have a list of all of the financial institutions, but you can call around to confirm you’ll be able to redeem at a given location.
In a case when it’s not possible to cash in the bond with your bank, savings bonds can be redeemed directly through the Treasury Department by downloading form 1522, getting the signed form certified and mailing your unsigned bonds to:
Treasury Retail Securities Services
P.O. Box 214
Minneapolis, MN 55480-0214
If you’re not listed as the owner of the bond, you have to submit legal evidence to show you are entitled to cash the bond.
Tax Implications of Selling Savings Bonds
The interest that your savings bonds earn is subject to:
- Federal income tax, but not to state or local income tax.
- Any Federal estate, gift and excise taxes as well as any state estate or inheritance taxes.
The ownership of the bond governs who is responsible for paying tax on the interest. Here are some examples:
- If you are the only owner of the bond, you owe the tax.
- If you use your money to buy a bond that you put in your name with a co-owner, you owe the tax.
- If you buy the bond but someone else is named as the only owner, the person who is named as the owner (not you) owes the tax.
- If you and another person buy a bond together, each putting in part of the money to buy the bond, and you are both named as co-owners, you and the other person must each report the interest in proportion to how much you each paid for the bond.
The taxes on interest for U.S. savings bonds are outlined under the section “tax considerations” on the TreasuryDirect website.
You will receive an IRS Form 1099-INT for your cashed bonds. If you cash them at a bank they will provide the form. They may even give it to you immediately or may mail it later
How to Report Bond Interest for Taxes
Owners can wait to pay the taxes when they cash in the bond, when the bond matures, or when they relinquish the bond to another owner. Alternatively, they can choose to pay the taxes yearly as interest accrues. But most savings bond owners choose to defer the taxes until they redeem the bond.
A bond that has reached its maturity and stopped earning interest is automatically considered redeemed, and the interest amount is reported to the IRS. The income is interest income and is reported on a 1099-INT, and the owner includes it on their yearly tax return.
If the bond owner decided to report the interest income yearly, the income from that bond and all other savings bonds for the same owner must continue to be reported yearly. The interest still accrues, in this case, and is not received. Once the bond reaches its maturity, the owner must let the IRA know that the interest has been paid yearly.
You can skip paying taxes on interest earned with Series EE and Series I savings bonds if you’re using the money to pay for qualified higher education costs. That includes expenses you pay for yourself, your spouse or a qualified dependent. Only certain qualified higher education costs are covered.
What to Consider Before You Cash In Your Savings Bonds
- Watch for Penalties. Series EE and Series I bonds come with one caveat: If you cash the bond in before the five-year mark, you forfeit the previous three months of interest earnings.
- Could You Earn More? The bond’s rate may vary widely, depending on the type of bond and the date of purchase.
- How Will the Money Be Used? If you need immediate cash to pay for unexpected expenses, a bond you recover from childhood can make a big difference in your financial life.
- Do You Want to Keep Growing the Sum of Money? Compare your current interest rate with other investments. High-yield savings accounts, for example, offer competitive rates and can offer greater flexibility.
How to Recover Lost Bonds
If you believe you own old savings bonds but have lost track of them, you may be able to file a claim for the bonds with the Treasury by filling out Fiscal Service Form 1048, Claim for Lost, Stolen, or Destroyed United States Savings Bonds.
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