Record Series I and EE U.S. savings bond redemptions on Form 8818

What is Form 8818?

You can use Form 8818 to record the redemption of Series EE or I U.S. Treasury bonds that were used for education. This form is for recordkeeping purposes only. It can also help you complete Form 8815 for each year you cashed bonds for education expenses.

You can carry the amount reported on Line 8 of Form 8818 to Form 8815 to skip calculations for the tax-free portion of the interest. Certain aid programs and qualified tuition plan distributions may reduce the excludible amount, but tracking bonds redemptions on Form 8818 can save time and provide more information on the bonds that were cashed.

Series EE and I bonds eligible for exclusion of interest

Redeeming a Series EE or I bond alone does not automatically mean you can exclude the interest from your income. The bonds must have been issued after 1989, in the taxpayer's name, or the taxpayer's and spouse's names if married filing jointly. The taxpayer also must have been at least 24 when the bonds were issued.

Bonds that were purchased for the taxpayer's children, and issued in the child's name, if the child was under 24 at the time of issuance, are not eligible for interest exclusion for either the parent or the child.

The taxpayer must have had qualified higher education expenses for themselves, their spouse, or dependents to exclude the interest from their income. Qualified higher education expenses include tuition, activity fees that are a condition of enrollment, books, and supplies.

Tip: Interest on Series EE and I bonds issued in a child's name are generally taxed at the child's tax rate once they turn 18. The parent can elect to have this amount taxed at their rate instead of their child's, depending on the sum of their child's investment income for the year.

Reporting bond redemptions

Every time you cash a bond, you should complete a separate Form 8818, even though there is space for multiple bonds on the form. Any bonds issued before 1989 and cashed out at the same time do not qualify for the exclusion, so you must separate them from any post-1989 bonds.

• In Part I, report Series EE bonds that were issued on paper and redeemed in the tax year. Record their serial number, issue date, and face value, then take 50% of the sum on Line 2.
• If you redeemed any Series I bonds or electronically issued Series EE bonds, report this information in Part II. Record the serial number, issue date, and face value in Part II and take the sum on Line 5.
• In Part III, record the total redemption of all bonds on Line 6, while the face values on lines 3 and 5 represent the cost of the bonds. On Line 8, calculate the interest and carry this number to Form 8815.

Confused? We can help. A Jackson Hewitt Tax Pro can explain this form and help you fill it out, with any supporting documentation or calculations you may need. Taxes can be complicated, but you are not on your own. Contact us today.

About the Author

Mark Steber is Senior Vice President and Chief Tax Information Officer for Jackson Hewitt. With over 30 years of experience, he oversees tax service delivery, quality assurance and tax law adherence. Mark is Jackson Hewitt’s national spokesperson and liaison to the Internal Revenue Service and other government authorities. He is a Certified Public Accountant (CPA), holds registrations in Alabama and Georgia, and is an expert on consumer income taxes including electronic tax and tax data protection.

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