I purchased some US Savings Bond years ago for my daughter's college
education. She is less than 2 years away from college and the bonds
have accumulated a fair amount of interest that has yet to be taxed.
At this point, I'm not sure cashing in the bonds to pay for qualified
expenses offers any real tax benefits. A number of other education
related tax credits and deductions are currently available. I hope
(no pun intended) to use the Hope credit in her first two years of
college. In the subsequent years, the Life Long Learning credit,
$4,000 income deduction, or $4,000 of tax-free interest on the bonds
all appear to offer about the same benefit based on my tax bracket.
Am I missing anything in the educational tax benefit of US Savings
Bonds? If not, are there any other tax reduction strategies that can
be used for US Savings Bonds? It's very unfortunate I cannot donate
them to a charity and receive the same tax benefit available for other
appreciated assets.
Thanks!
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