| Interest Income from Savings Bonds (????) |
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AXArmani
New Member
Cash: $ 1.10
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Joined: 10 Mar 2005
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| Interest Income from Savings Bonds (????) |
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I am at a loss as to what to do.....here is my dilemia.
I have 25,000 in savings bonds that I want to cash in and reinvest. I currently have no earned income and I will have an earned income after 2006 (I'm in school still). I am carrying a $3,000 loss on my income tax for next year. If I sell my bonds (25K in total, 10K in principal and 15K in interest) what part of the 25K will I need to pay 15% income tax on? Just the interst? With that said how can the 3K loss help me? Does the 3K come off the 15K in interest and then I pay the tax on the remaining interest? OR Does the 3K loss play in some other way. Basically I am stuck on how to figure this out and what I will be paying out in taxes and is this even a wise idea to dump the bonds and then reinvest into a tax free bond. ANY thoughts, guidance or wisdom would be much appriicated. thanks all
AX
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Sat Mar 19, 2005 1:04 am |
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BlankenshipFP
Money Talk Advisor
Cash: $ 79.56
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Location: Illinois
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If the 3k loss is a capital gains loss, it should just be a deduction against ordinary income. In this case, assuming that your basis in the bond is 10k, and the value is 25k, then you'll have ordinary income of 15k (assuming this is a US Savings Bond). You'd have an AGI (assuming no other deductions) of 12k.
Hope this helps -
Jim Blankenship, CFP�, EA
Blankenship Financial Planning, Ltd.
www.BlankenshipFinancial.com
Standard IRS Circular 230 Notice Applies
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Mon Mar 21, 2005 1:02 am |
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