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• Stephen Cooper

Series I Bonds

Series I bonds. Information on I series savings bonds.

Other than a house, a child's education is probably one of the greatest expenses are family will have to face in their lifetime. With costs soaring well over $100,000 for a basic four-year college education, people are looking for ways to sock away some money for the future. I bonds are a sound investment option when the focus of the earned money is going to be education. There are a number of ways that I bonds are good choice when saving for post-high school education.

Back in 1990, the United States Treasury Department created the "Education Bond Program." The Treasury Department "allows interest to be completely or partially excluded from Federal income tax when the bond owner pays qualified higher education expenses at an eligible institution or State tuition plan in the same calendar year the bonds are redeemed. Payments to State tuition plans have been eligible since January 1, 1998."(http://www.publicdebt.treas.gov/sav/saveduca.htm).

I bonds are one of the bonds eligible for this program. The good thing about I bonds is that the purpose of the investment does need to be disclosed when purchasing them, but only when ready to cash the I bonds in.

The United States Treasury Department states that In order for I bonds to be eligible for tax exemption for educational purposes, the I bond buyer must:

• Be at least 24 when purchasing the I bond
• Be listed as the owner of the I bond (if using the money for own education. A child may be listed as the beneficiary of the I bond, but not as the co-owner)
• File jointly for taxes if married when buying the I bonds
• Use the I bond at a qualified educational institution (which means a two to four year college or university or a vocational school)

I bonds are a great long term investment for parents who are hoping to send their children off to school. Interest rates on I bonds are lower than other forms of investments (i.e. the stock market), but the return is guaranteed and the tax breaks can not be surpassed. Whether the market is up or down in any given year, I bonds will hold their value. This is why many families are turning to I bonds as a supplement to other investment opportunities that they may be taking advantage of, either through a planner or through an employee savings plan.