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Veteran Services: Finance Questions

Finances

You're working, and you've got a family that depends on you - both now and down the road. Where do you invest your money? Do you borrow against the equity in your house? Through a preferred provider relationship with USAA, The American Legion can provide expert financial advice to just about any question.

Questions & Answers

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Financial Questions & Answers

Question:

I am holding approximately $40k in government savings bonds. How do I cash them in since the banks no longer provide this service? And what would the approximate IRS tax penalty be on the interest? -John

Answer:

Actually you’re only half right. Effective this year banks or other financial institutions stopped selling paper savings bonds. However, you can still redeem them at your local financial institution. But, you definitely don’t have to redeem them. In fact, if you visit www.treasurydirect.gov, you can learn about converting your paper bonds to electronic savings bonds. When you redeem savings bonds you’ll pay ordinary income tax on the interest you’ve earned over the years. It’s impossible with the limited information you’ve provided for us (we’d have to have your complete tax picture as well as the amount of interest) to give you an accurate answer as to the tax impact of redeeming your bonds.