Claiming College Expenses to Avoid Savings Bond Income Taxes

The savings bond is one of the most popular investments in the market because of its relative safety. In addition to being safe, savings bonds are also a great way to save for college expenses. Here are a few things to consider about claiming college expenses so that you can avoid paying income taxes on savings bond interest.


One of the biggest advantages of purchasing savings bonds is that you can use them to pay for college expenses without having to pay taxes on the money that you earn from them. With savings bonds, you do not have to pay taxes on the interest as it accrues. Instead, you will pay taxes on the money that you made when you cash the savings bonds in. However, when you use the money to pay for college, you can actually get an exemption on this money. In order to get this tax exemption, you will have to make sure that you follow the rules of the program.

Qualified Expenses

When you use the money from your savings bonds, you have to use it for qualified expenses. This means that you can use the money on things like tuition, lab fees and other course-related fees. You can use the money for anything that is directly related to paying for your class. However, you cannot use the money to pay for things like books or room and board. You also have to use the entire amount of the savings bond, including principal and interest, to pay for these qualified expenses. If you have scholarships, grants, or any other type of assistance, this will lower the amount of qualified expenses that are allowed. These qualified expenses also have to be incurred during the same year that you cash in the savings bonds.


In order to claim college expenses to avoid savings bond income taxes, you are going to have to meet some requirements. First of all, you have to be at least 24 years old in the month that you purchased the savings bonds. If you are purchasing the savings bonds for your child, you also have to have the bonds in your name instead of in the name of your child. You also have to file a joint tax return if you are married. You also have to be dealing with an accredited university, college, or technical school.

Income Restrictions

If you want to qualify for this program, you are also going to have to meet certain income restrictions. If you are an individual, you have to make less than $67,100 in order to get the full deduction. You can get a partial deduction if you make between $67,100 and $82,100. If you are a married couple, you can get the full deduction if you make less than $100,650. You will get a partial deduction if you make between $100,650 and $130,650.

Tax Return

When you are going to claim this tax deduction, you need to make sure that you put it on your tax return. It may be in your best interest to consult with a tax professional so that you will document it in the right place.

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