Cash in Family's Bonds? They're not Yours

Dear Dr. Don,

I purchased some Series E bonds using my Social Security number, but they were issued to my daughter and grandson. Would I have a problem cashing them in as I will have to report the interest to the IRS?

-- Orlando Obviate

Dear Orlando,

Since the Treasury stopped issuing Series E savings bonds in June 1980, it's more likely you're talking about Series EE savings bonds. If you are talking about Series E bonds, then by all means they should be cashed in because they stopped earning interest once they reached final maturity.

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Bull's-Eye: Hit Your Savings Target

Why would you be cashing in your daughter's and grandson's bonds? They're not yours. Here's what the TreasuryDirect website has to say on the topic on its Web page on buying EE savings bonds:

Identifying Information Your Social Security number (SSN) is needed to buy a bond. The bond owner will be asked to provide his or her Social Security number for tax purposes when they cash the bond. But, if you're buying a gift and don't know the person's number, you can use your own. Using your SSN doesn't mean you will have a tax liability when the bond is cashed. The bond owner will be asked to provide his or her Social Security number for tax purposes when they cash the bond.

So you don't face the tax liability. I'd suggest that your family members track the value of their savings bonds using TreasuryDirect's savings bond calculator or its Savings Bond Wizard program.