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You can avoid paying 2016 taxes on it by cashing it in 2017. Of course, it will be reflected in your 2017 taxes, but you will have achieved your stated goal of not paying taxes on the bond with your 2016 taxes.
You will pay taxes on the accrued interest whenever you cash it in. What remains of the interest will be yours to spend as you wish. That will be money that you didn't have available to spend before, so you're going to come out ahead anyway, even with paying the taxes. Which you will have to do.
It's income and should be reported on your taxes. I think the only way to avoid it is to not cash it in and how silly would that be?
You could have used another word that started with 's' for that post.
Quote:
Originally Posted by leighland
I have a Bond that matured years ago
i want to cash it but it seems the last time i cashed a matured bond, all the interest i made on it went against my tax return
People who make money are supposed to pay taxes on it. People that don't pay their share make it so that others have to pay more to make up for it.
However, as a taxpayer, I guess I should thank you for going year-after-year not allowing yourself to use the money that you earned and is yours to do with as you please. The payment of $475 to you comes from the US government and not cashing the bond in means that the government doesn't have to pay you anything.
Quote:
Originally Posted by Lowexpectations
is there a way to cash it without taking a 475$ deduction off my 2016 tax return?
It's not a deduction. It's an income item. It gets added to your income and near the bottom of the tax return, all your income items less all your deductions result in Taxable Income. ( Deductions reduce your taxable income. )
If you have earned $475 in interest from the bond, then your tax, is increased by the tax on that ( marginal ) income.
Cash it in, get on with your life and take that money and either spend it, save it, invest it, give it to someone else.
If you are single and make less than about $50k then the increased tax from that interest will only by about $75. If you are single and make about $100k then the increased tax will be about $120. All this is assuming you don't have other deductions like a mortgage or something.
If you are single and are making more than $100k then worrying about the tax on $475 is simply stunning.
Sorry Lowex - I wasn't thinking of that s-word, earlier. I guess that there are a plethora of words you could have used other than "silly" - my bad. ( stupefying, senseless, splendid, ... I could go on ... )
What is the value of the bond? You only have to pay taxes -- at your rate -- on the diff between what was paid for the bond and its cash out. Example: You paid $100 and today's value is $1000. Earnings would be $900, at a 20% tax rate the taxes would be $180 so you would net $880 after paying taxes on the proceeds. You may even have the option of having taxes withheld from the proceeds.
Thanks all. I'll hafta decide whether to cash and treat it like a short term loan or just rip it up.
Makes me want to call Grover Norquist lol
Why did you buy the bond in the first place?
( "Buy the bond" = Make the investment = Loan the money to the government )
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