<p>My EFC is at 1300 and well mt family doesn't contribute. I was given 2k in bonds, but if I cash them I am sure it will effect my efc in later years. Is there a way to cash the bonds and not affect the efc.</p>
<p>By not cashing in the bonds you have an issue - a 20% assessment. By cashing them in you will not have an income assessment, unless your income is over $3,000, then everything over that will be assessed at 50%. If you spend the money, there won't be an assessment either, but you have to cash in the bonds first.</p>
<p>Depending upon the type of bonds they are, Some EE bonds issued after....not sure perhaps 1989/1990 or thereabouts, if the have both your's and your parents name I believe can be cashed, and they are not taxable if your parents cash them. Look it up. Not sure of the details at this time... Nor the treatment as income to whoever cashes them</p>
<p>The whole savings bond thing is very confusing to me - if anyone can shed more light in simple language that would be GREAT!!!!</p>
<p>cross posted with reecy. Not sure if you need to pay taxes at all. The money used to purchase them was after tax money. Do some research b4 you cash them at all.</p>
<p>I had some bonds that I purchased with the intention of using them for the kids edu...But I DID declare them as an asset on FAFSA</p>
<p>First you need to check out the actual current vaue of the bonds. If these are Series EE Bonds they are originally sold for something like half their face value. So a $100 bond costs $50 to buy. It does not reach the full face value of $100 for many years (something like 30 years I think). There is a web site where you can put the bond numbers in and get the current values. It will show the current value and what the original purchase price was (as said before usually about half the face value on the bonds) and how much is the increase in value (accrued interest). If you do not sell them the currrent value has to be shown as an asset on FAFSA. If you cash the bonds in only the interest will be taxable as income - not the original purchase price. </p>
<p>For instance the the face value of the bond may be $100 - if it was purchased for $50 and the accrued interest is $30 then its current value will be $80. If you do not sell it then it is an asset of $80 so must be shown on FAFSA as an asset and 20% ($16) will be assessed to your EFC. If you do sell it $50 was the original purchase price so is not taxable, $30 is accrued interest and is taxable. When you do FAFSA the $30 must be shown as income and (if your income is over $3000) 50% ($15)will be assessed to EFC. Be careful of your timing if you sell them - if you have not spent the proceeds at the time you file FAFSA they are still an asset for FAFSA. So don't sell them at the end of December and still have the proceeds sitting in the bank the day you file FAFSA because then you will be assessed for both the income from selling them and the asset for having cash in the bank. </p>
<p>All the above is assuming the bonds are in the students name. To receive tax exemption for education the bond must have been issued to someone who was 24 (or over 24?) at the time. So if the bonds were in the parent name they may be non taxable if used for education purposes. If the bonds are in the student name there is no tax exemption for education (which seems really odd and unfair to me). </p>
<p>I am not a tax expert but do have some series EE bonds and the above is what we learned when doing FAFSA this year.</p>
<p>Didn't you ask the same question a few weeks ago? I seem to remember another thread concerning $2000 in bonds.</p>
<p>lonk for calculating the bond values. You have to enter each bond number.
<a href="http://www.treasurydirect.gov/BC/SBCPrice%5B/url%5D">http://www.treasurydirect.gov/BC/SBCPrice</a></p>
<p>Swimcatsmom is correct. Our EE bonds have both my, and my kids name.... WOOHOO.... So the interest will be tax free if used for their education. I did go to the referenced website, and entered in all of the bond numbers and did treat it as MY asset for the FAFSA.</p>
<p>I agree that it is unfair that if the bonds are only in Juniors name that the interest is treated as non-taxable....</p>
<p>There also may be another way around it. I think that you can change ownership of the bonds. But since I didn't need to do that I did not research it further.</p>
<p>Good luck!!</p>
<p>I just read this on "Inside Higher Ed". You might want to think about holding onto them and having them assessed at 20% depending upon your circumstances, b/c this might apply to you in the future, even if you won't get the full benifits of this since you might have graduated by 2013 (who knows if and when this would pass):</p>
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Raise the amount that working students can earn — through the “income protection allowance” — without reducing their financial aid awards. Those amounts would rise to $6,000 by 2012-13 for dependent students and $9,330 for financially independent students.
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I agree that it is unfair that if the bonds are only in Juniors name that the interest is treated as non-taxable....
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<p>TYPO! What hap to the editing tool?? </p>
<p>If bonds are only in Juniors name the int is TAXABLE! I still think it is unfair</p>
<p>northeastmom what do you mean by " assessed at 20%"</p>
<p>The bonds are almost at maturity and with the interest they equal to around 2K, I have already used the calculator. so the bonds were purchased for around $1000 or so and they are EE.</p>
<p>Got that figure from Reecy's post #2, which I believe is correct. The finaid website states:</p>
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Needs analysis formula assume that the child contributes a much greater portion of his or her assets then the parents.
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