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When you redeem your paper savings bonds and savings notes, the institution paying the bonds will report interest earned on the bonds or notes to you and to the IRS. You will receive an IRS Form 1099-INT from the institution, either at the time you redeem your bonds or shortly after the end of the year in which you redeemed the bonds. Certainly being able to itemize your taxes and mortgage interest will allow you a better tax situation than just using your standard deduction. You may only use the mortgage interest that was actually paid in the tax year though. The amounts will not totally "zero" you out for tax on the income but it will, as I said be better if your itemized amounts are larger than the standard deduction.
The savings bond education tax exclusion permits qualified taxpayers to exclude from their gross income all or part of the interest paid upon the redemption of eligible Series EE and I Bonds issued after 1989, when the bond owner pays qualified higher education expenses at an eligible institution. So if you didi pay education expenses for you, your spouse, or your dependent you may be able to use that to lessen your tax on the bonds.
Do I need to amortize the interest over the life of the silent 2nd loan I am paying off or can I deduct all the interest paid in the tax year 2011.If I have to amortize the interest $14,755(total interest paid on the loan in 2011 divided by the number of years I have held the loan-9.08 years or can I itemize the total amount of interest I paid, $14,755 in the tax year 2011?
Only the amount paid in the tax year is allowed. All interest paid in 2011 for the main home is allowed.
If I understand correctly regarding the interest paid on the ee Series Savings bonds, I can only deduct the interest on the EE series bonds if I am paying for qualified higher education at an eligible institution. Do you know what is meant by eligible institution, how is that determined?
An eligible educational institution is any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. The educational institution should be able to tell you if it is an eligible educational institution.
So the interest paid from the EE series savings bonds cannot offset taxes from interest on Mortgages or income from unemployment, it can only be offset by educational expenses from eligible postsecondary institutions as determined by the U.S. Dept of Education?
Well the interest that you pay on mortgage will help to lower your taxable income (if it is more to itemize then use standard deduction) but it cannot just be used to lower the interest income as a straight subtraction. If you do have education expenses then that could really help the interest earned on the EE bonds.
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Did you have another question?
No thank you for your time. You've been very helpful