Found Money
August 23, 2010
Do you remember receiving a savings bond from a relative in celebration of your high school graduation, birthday or other notable occasion? What did you do with it? Do you know where it is? If the bond is more than 30 years old, it has stopped paying interest.
The Department of Treasury has more than $16 billion worth of savings bonds that were issued more than 30 years ago and are fully matured. These bonds are likely worth four or more times their face value, but are no longer earning interest. In order for the owners of these bonds to begin earning a return again, the bonds must be cashed-in and the proceeds reinvested.
Lost and Found
If you can find your savings bond and it was issued prior to 1980, you need to take it to your bank and cash it in. The bond will have matured and no additional interest is being earned.
If you remember owning a bond, but are not sure if it was ever cashed-in, you can go to the government’s website, www.treasuryhunt.gov. If the bond was purchased after 1974, you simply enter the owner’s Social Security number and system will provide the status of the bond. If you can’t find the bond, there are forms available on this website to allow you to reclaim it. If the bond was purchased prior to 1974 and you do not have a clue whether it still exists, the website has instructions on how to find these bonds as well.
Income Tax Due
When you cash-in a savings bond, you owe Federal income tax on the interest earned. This is calculated as the difference between the proceeds received and the initial cost of the bond. U.S. savings bonds are exempt from state and local income taxes. The Treasury Department will report the interest that you receive on a form 1099-INT that you can use in preparing your tax return.
No Gifting Allowed
Many owners of savings bonds would like to escape the tax payment by gifting the bond to a child or grandchild who is in a lower income tax bracket. Even though this is a workable strategy with stocks and other investments, it is not allowed with savings bonds. The owner must pay the tax either during his/her lifetime or through their estate.
Likewise, a gift of the savings bonds to a charitable organization does not escape taxation. Any ownership change will trigger the taxation of the interest to the original owner.
Summary
Baby boomers are the age group that most likely received savings bonds as gifts or who began purchasing bonds through payroll deduction at work. Of $16 billion dollars worth of unclaimed bonds, it is likely that much of it belongs to the boomers. If you can’t find yours, check the safe deposit box, the dresser drawer, or any place a savings bond could be kept. It may be worth the hunt!
