I purchased some US Savings Bond years ago for my daughter's college education. She is less than 2 years away from college and the bonds have accumulated a fair amount of interest that has yet to be taxed.
At this point, I'm not sure cashing in the bonds to pay for qualified expenses offers any real tax benefits. A number of other education related tax credits and deductions are currently available. I hope (no pun intended) to use the Hope credit in her first two years of college. In the subsequent years, the Life Long Learning credit, $4,000 income deduction, or $4,000 of tax-free interest on the bonds all appear to offer about the same benefit based on my tax bracket.
Am I missing anything in the educational tax benefit of US Savings Bonds? If not, are there any other tax reduction strategies that can be used for US Savings Bonds? It's very unfortunate I cannot donate them to a charity and receive the same tax benefit available for other appreciated assets.
Thanks!
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