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Guru_Guy, Lawyer (JD)
Category: Tax
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Experience:  I am a lawyer who understands tax law and finance.
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I will be 67 in Nov. 2008. I rec. my SS and a sm. State Pension

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I will be 67 in Nov. 2008. I rec. my SS and a sm. State Pension Ck. total amount of 19000.00 per year. I am a widow and need to cash in my savings Bonds. Will I have to pay Taxes on this.
Submitted: 8 years ago.
Category: Tax
Expert:  Guru_Guy replied 8 years ago.


With most bonds, you do not pay taxes on the interest until they are cashed. If that is the case (in other words, you have not been paying taxes on the interest each year) then, yes, the interest you earned on those bonds over the years is taxable.

However, given your total level of income, your taxes are likely to be quite low. The important thing is to keep your total income under $25,000 per year so that your SS income will not be taxed at all.

If you can keep your total income (not counting SS) under around $12,500, you should not owe any federal taxes. If you go above that, the amount above would be taxed at 10%. Therefore, if possible it makes sense only to cash some of the bonds each year so that you do not realize too high an income in any one year.

Also, keep in mind tha tthe full amount of the bond is not taxed, only the interest. So if the bond is worth $1000, but you paid $700 for it, only $300 would be considered income.

I hope this helps!


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Customer: replied 8 years ago.
Thank you so much, you have definitely answered my question., and also quickly. I am impressed. Regards XXXXX XXXXX you again.
Expert:  Guru_Guy replied 8 years ago.

Thank you for your kind words. I am glad I could help. If you have any follow up questions, please feel free to ask. Otherwise, I hope you will accept my answer so I get credited for my work.


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