The interest from savings bonds you cash in may be tax-free. That can be the case if you use the money for college tuition and fees.- Several conditions apply. For example, you must have been at least age 24 when you bought th bonds.
- Either you or your spouse must own the savings bonds.
- The bond proceeds may be used for the owner’s education, the owner’s spouse’s education, or the education of a dependent for whom the owner claims an income tax exemption.
- Income limits exist for this tax benefit. For completely tax-free income, your modified adjusted gross income (MAGI) in 2011 must be no more than $106,650 on a joint tax return or $71,100 on other returns. The tax exclusion is completely phased out with MAGI of $136,650 on joint returns and $86,100 on other returns. These numbers increase with inflation.
2011 Q3 | Tax-Free Savings Bonds