Gifts of Savings Bonds: Getting Started
How It Works
Savings bonds are normally taxed when they're cashed in, reissued to another person or reach final maturity. Fortunately, you can reduce, or even eliminate, income taxes when you choose to leave your bonds to St. Mary's Medical Center Foundation. Although the bonds themselves can't be directly donated to a charitable organization during your lifetime, there are three smart strategies that allow you to use your bonds to support our mission.
Even though U.S. savings bonds offer steady return and absolute security, redeeming them can cause tax headaches. But you can save on taxes by using your bonds to support our cause.
Three Charitable Options
- Redeem your savings bonds and use the cash to make a gift to us. The redemption will trigger a tax liability to you on the interest income, but if you itemize, you will receive the benefit of a charitable tax deduction to help offset the additional taxable income.
- Leave the bonds to us through your will. Because we are a tax-exempt organization, we will receive the full value of the bonds, which could have otherwise been reduced by up to 39.6 percent for income taxes. For a small percentage of people, federal estate taxes might also reduce the amount available.
- Leave the bonds upon your death to a charitable remainder trust. They will first benefit your selected loved ones with lifetime payments, and then the balance will support our mission.
Case in Point
Steve leaves $10,000 of U.S. savings bonds to his daughter, Becky, upon his death. Becky is in the 35 percent income tax bracket, so she receives only $6,500 ($10,000 - $3,500) after she pays the income tax on the bonds. If Steve were to leave the bonds to us instead, we would receive the entire $10,000 because we are a tax-exempt organization.
|Learn more about each of these ways to donate your savings bonds and the benefits in store for you.|
How Long Will Your Bonds Earn Interest?
Date of Issue
Number of Years Bonds Earn Interest
|E||May 1941-November 1965||40 years|
|December 1965-June 1980||30 years|
|H||June 1952-January 1957||29 years,
|February 1957-December 1979||30 years|
|Savings Notes||All issues||30 years|
|EE||All issues||30 years|
|I||All issues||30 years|
|HH||All issues||20 years|
As of Sept. 1, 2004, you can no longer reinvest H/HH bonds or exchange E/EE for HH bonds.
If you have questions about this tax-smart way to give, please contact David Sheils, FACHE at 304-526-1211 or firstname.lastname@example.org.
Copyright © The Stelter Company, All rights reserved.
The information on this website is not intended as legal or tax advice. For legal or tax advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income taxes apply to federal taxes only. State income/estate taxes or state law may impact your results.