Using U.S. Savings Bond Interest to Pay Educational Expenses

Posted in Tax Highlights May 2008

Keywords: education expenses, education tax benefits, tax, tuition

Qualified U.S. savings bond interest used to pay higher-education tuition and fees during the taxable year are not includible in gross income to the extent that the aggregate redemption proceeds from the bonds redeemed during the year do not exceed the qualified higher education expenses.

If the redemption proceeds exceed the qualified higher education expenses, a pro-rata share of the income (attributable to the allowed proceeds) for the year is excluded from gross income. Qualified U.S. savings bond interest includes only Series EE bonds issued after Dec. 31, 1999 to an individual at least 24 years old at the time of issuance.

What are the income limitations?

Married taxpayers filing jointly are completely phased out of the savings bond interest exclusion if they have modified adjusted gross income of $130,650. All other taxpayers with modified adjusted gross income of $82,100 in 2008 are completely phased out of the exclusion.

For more information, contact Mike Calahan at 312-980-2996 or Tara Wells at 312-980-3277 for more information.

This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.


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This publication is part of Blackman Kallick’s marketing of professional services, and is not written tax advice directed at the specific facts and circumstances of any person and/or entity. Contents of this publication are of a general nature, and you should not act on this information without obtaining professional advice from your business advisor that is appropriately tailored to your individual needs and circumstances. This written advice is not intended or written to be used, and cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.