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you holding bonds that are no longer
paying interest? Not only
may they have stopped paying interest
but you may owe income tax on the
interest income that was deferred.
The following bonds no longer earn
interest:
Series E – May 1941
through May 1964 and December 1965
through May 1974.
Series H – June 1952
through May 1974.
Series HH - Jan 1980
through May 1971.
If it is within one year of the
maturity date, you can defer the
interest income by rolling the bond
over into a series HH bond. If
you are past the one year deadline,
you are no longer earning interest on
that investment and you owe income tax
on the accumulated interest income
unless you made the election to report
interest annually as it was earned
(most people don’t make this
election).
NOTE – August 2004 is the
last issue month for HH/H
bonds. After August 31, 2004 you
will no longer be able to exchange
your EE/E bonds for HH bonds.
Series EE bonds are currently
paying 2.84% and have an initial
maturity date of 20 years, their
interest rate is fixed for the life of
the bond. Their initial purchase
price is half the face value and
penalties are assessed if they are
cashed in within the first five years.
Series I bonds are currently
paying 3.39% and have an initial
maturity date of 30 years. The
interest rate is variable based on
interest and inflation rates posted
every six months. They have a
fixed interest rate component which is
currently 1%. Series I Bonds are
purchased at full face value initially
and penalties are assessed if they are
cashed in within the first five years.
US Savings bond interest income
is exempt from State taxation and
may be exempt from federal taxation if
the proceeds are used to pay for
higher education costs and you meet
other eligibility guidelines.
Please call the office if you
have any concerns about bonds that
have matured or will be maturing in
the near future.
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