Expert: Gina Boykin - 9/30/2008

Question
I have some EE bonds I have saved for my son's education. When cashing them out,will I have to pay taxes if they are strictly for educational purposes?

thank you,
Janelle M.

Answer
It depends.  There are certain rules you have to meet to be able to use the bonds for education and receive tax-free gains.  I've listed these below.  They came from www.treasurydirect.gov.  You can visit that website for more details, and a link to more information on the income requirements.

1.Qualified higher education expenses must be incurred during the same tax year in which the bonds are redeemed.
2. You must be at least 24 years old on the first day of the month in which you bought the bond(s).
3. When using bonds for your child's education, the bonds must be registered in your name and/or your spouse's name. Your child can be listed as a beneficiary on the bond, but not as a co-owner.
4. When using bonds for your own education, the bonds must be registered in your name.
5.If you're married, you must file a joint return to qualify for the exclusion.
6.You must meet certain income requirements.
7.Your post-secondary institution must qualify for the program by being a college, university, or vocational school that meets the standards for federal assistance (such as guaranteed student loan programs).