M.K., Park Ridge, Ill. writes:
When my son was born, relatives gave him Savings Bonds. Now that he's going to college, we want to use some of those bonds to help pay tuition. Do we have to pay tax on the income?
Yes. Series EE and I bonds used to pay for higher education are excluded from tax only if the bonds are bought after the owner's 24th birthday. Bonds transferred by the buyers to young children (as in this case) are not eligible for the tax exclusion. (Note: The benefits of the exclusion are phased out for higher-income taxpayers.) For more details on U.S. Savings Bonds, visit www.savingsbonds.gov.