Treasury Bonds Tuition & Ownership

Mar 25, 2007 2 Replies
P

Many years ago, we bought some Series EE bonds for our daughter as part of a college savings plan. We purchased them jointly with both my name and my daughters name on the bonds and using her SS# as the tax ID. At the time, we were above the income threshhold for receiving tax-free gains when using the money for tuition. Unfortunately, I am currently unemployed and am unlikely to exceed the income threshhold again this year.



Question: Now that she is in college, is there a way to change the SS# on the bonds or have her gift the bonds to me so that we might take advantage of using the bonds for tuition without paying taxes on the gains?



Thank You.



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A

N`o. A qualified bond is one that would have been registered in your name alone or jointly with a spouse when first purchased.

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H

There might be a way to do this, provided that when the bonds were purchased only your funds were used. Whose SSN is on the bond is irrelevant for purposes of ownership. US savings bonds may be retitled in the name of only one of the co- owners (you) and no tax will be immediately due, since the other co- owner (your daughter) did not provide any funds for the initial purchase. This will result in the bonds being titled in your name alone, with the accrued interest still untaxed. The bonds can then be used in the US Savings Bond Educational Program, whereas there is no tax due if the funds are used to pay qualifying educational expenses for college.

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