How to Cash in EE Bonds for College

by Cindy Quarters

It is possible to cash in EE savings bonds without having to pay tax on the bonds' interest, as long as you meet certain requirements. Some of the requirements have to do with when and how you cash in the bonds, others relate to how you spend the money you get and your income level. If you qualify, you can avoid paying taxes on some or all of the interest from the bonds. You can always choose to cash in your bonds, but by minimizing tax liability you will have more money for college.

1. Determine who owns the bonds. If they are issued in your name or if they show you and your spouse as owners, you meet the ownership requirement. The bonds cannot list your child as an owner or co-owner, but he can be a beneficiary of the bonds. You can cash bonds in your child's name if he is a minor, but you will not receive a tax benefit if your child is an owner of the bond.

2. Check the issue date of the bonds. This is not necessarily the date of purchase, but is the first of the month during which the bond was purchased. You must have been at least 24 years old prior to that date in order to qualify to cash in the bonds tax-free. If not, you can't get the tax savings. If married, you must also file your taxes jointly to be eligible.

3. Identify for whom the proceeds will be used. Educational expenses for yourself, a spouse or a dependent qualify. Expenses for others do not.

4. Confirm that the college is an eligible institution. Most colleges in the United States qualify, as well as some in other countries. The school must be approved in order for you to get tax savings.

5. Verify that your modified adjusted gross income (MAGI) is below the eligibility cutoff amount. This changes each year, so you need to check what the allowable MAGI is for the year in which you are cashing the bonds. As of the time of publication, the MAGI cutoff is $85,100 for a single filer, and $135,100 for married filing jointly or for a qualified widower. You are not eligible for tax benefits if you are married and filing separately.

6. Cash the appropriate amount of bonds at any financial institution that handles bond transactions. Use the money for college and report both the income and expenses on your taxes.


  • Figure how much you will need prior to cashing any bonds, for the best tax advantage. Scholarships, fellowships and tax-free assistance from an employer or veteran's assistance programs may all impact your tax benefits.


  • You can only cash bonds tax-free if you use the money to pay for allowable college expenses. Room, board and books are not allowed. If you cash in more bonds than you need for allowable expenses, you will have to pay taxes on the overage.

Photo Credits

  • Comstock/Comstock/Getty Images