Cashing in savings bonds for college can help students pay for their tuition but not their room and board. Follow the steps outlined in this article and request a Form 1522.
Cashing in Savings Bonds for College
College students try almost anything these days to pay for their tuition, their books, their room and board, food and other necessities. They will apply for work study jobs, financial aid, and apply for part time jobs close to their college's campus. Some college students even work full time jobs during the summer months to make as much money to pay for their education as possible. For some, this money just is not enough to make it through one, sometimes even both semesters. So, there are college students who need to cash in savings bonds for college, dipping into the nest egg that was created by a grandparent, parent, or other relative when they were a child.
Steps for Cashing Them
Most college students looking to cash in their savings bonds to use on their education should know that the savings bonds are taxed by the Federal Government when they are cashed in to a bank. There is a possibility that the student can have the taxes on the cashed in bonds waived. Just check with your accountant or person who prepares your yearly income taxes what the process for having the taxes waived entails.
The United States government has specific rules and laws that govern who is allowed to cash in their savings bonds for use on education so make sure you check your eligibility prior to cashing in the bonds. For the most part, the following eligibility rules apply:
- The funds from the bonds must be used in the same calendar year as when they are cashed in
- The student cannot be the owner or the co owner of the bonds they wish to redeem
- Tuition and lab fees can be paid for with savings bonds cash
- Room and board expenses cannot be paid for by the cash redeemed from savings bonds