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Cashing in EE Bonds: Fast and Easy

written by: wearmanyhats•edited by: Laurie Patsalides•updated: 2/18/2010

EE Bonds are a hot gift to give to a young person. But what do you do when cashing in series EE savings bonds? Here's what you need to know.

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    Cashing In the Bonds

    Cashing in series EE bonds is easy. Just go to your local bank and tell the teller you need to cash it in. The teller will give you a form to record your name and address, as the Federal Government will send you the proper paperwork for your taxes.

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    The Perfect Gift for Young People

    It might seem like just another old piece of paper, but a EE Bond is a great gift for kids. Why? Parents can toss it into a safety deposit box and forget about it until cahing in EE bonds when it is time for their child to go to school. They are inexpensive; you can buy one for as low as $25. Best of all, these bonds are tax exempt if you use the bond to pay for your child's education.

    If you are going to use the money for education, be sure to keep complete records to show the proceeds actually went to pay for tuition and required fees. The money can not be used tax free for any other college expense, so keep the paperwork on how much the qualified tuition was covered by the bond. Cashing in EE bond is easy, but saving money on the taxes requires you to be a dillegent bookkeeper. Be sure to record the serial number and the date you cashed it in.

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    Strategies for Cashing In EE Bonds

    As with many investments, it is tempting to throw the savings bonds into a safety deposit box and forget about them. However, the tax laws periodically change when it comes to bonds. Like stocks, commodities, collectibles and real estate, it's critical to understand what is happening to those investments. For example, years ago it was legal to roll EE bonds over into HH bonds. Today, that is not allowed. However, it might be wise to discuss a long term strategy with a financial planner or C.P.A. before cashing in a EE bond.

    Another reason to keep up on these bonds is to make sure that inflation is not so high that it is eating up the returns. It is important to know when they stop paying interest. Check with the bank teller to find out before cashing in the EE bond to find out how much each is worth. You should also look at which is paying a higher interest rate and which ones will mature the soonest. That way you can develop a strategy to cashing in each bond to maximize your return.