Gift of Savings Bonds

Ways to GiveGift of Savings Bonds

Savings bonds are normally taxed when they are cashed-in, reissued to another person, or reach final maturity.  Fortunately, you can reduce, or even eliminate, income taxes if you were to choose to leave your bonds to Big Brothers Big Sisters of Central Mass/Metrowest.  Although the bonds themselves can’t be directly donated to charity during your lifetime, there are three smart strategies that allow you to use your bonds to support our mission.

 

How it works

Three Charitable Options:

1. Leave the bonds to BBBSCM/MW 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% for income taxes. For a small percentage of people, federal estate taxes might also reduce the amount by more than 39.6%

2. 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.

3. Redeem your savings bonds and use the cash to make a gift to BBBSCM/MW. The redemptions will trigger a tax liability to you on the interest income, but if you itemize, you will receive the benefits of a charitable tax deduction to help offset the additional taxable income.

 

Example:

Joseph leaves $10,000 in U.S. Saving Bonds to his son, Paul, upon his death.  Paul is in the 35% income tax bracket, so he will only receive $6,500.  ($10,000 - $3,500) after he pays the income tax on the bonds.  If Joseph were to leave the bonds to a charity like BBBSCM/MW instead, the charity would receive the entire $10,000 because they are tax-exempt. 

How Long Will Your U.S. Bonds Earn Interest?

Series                      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, 8 months

                                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                                                       30 Years

Source: www.savingsbonds.gov

As of September 1, 2004 you can no longer reinvest H/HH bonds or exchange E/EE bonds.

 

If you have questions about this tax-smart way to give, please contact Harold Pinkham, Director of Advancement, at 508-752-7868 ext: 12