Co-owner can be taxed on bond interest — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

Co-owner can be taxed on bond interest

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Q. I bought Series EE bonds for my daughter when she was young. We were listed as co-owners of the bonds. If we cash them in, do I have to pay any part of the tax? M.C., Cedar Grove, N.J.

A. Yes. If you purchased the bonds, you must pay the tax on the accrued interest when the bonds are redeemed or mature. It doesn’t matter if the other co-owner actually receives the interest. On the other hand, if you and a co-owner jointly purchase a Series EE Savings Bond, the interest is taxable to each recipient in proportion to the amount contributed. Tip: You can arrange to have Series EE bonds reissued in your child’s name. But if you do that, you’ll have to pay tax on the interest accrued up to that point.

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