* KIPLINGER.COM answers the question “What Are I-Bonds?”.
Some truly good news (highlights are mine) -
“Thanks to high inflation, those issued from May through October 2022 offer a sky-high composite rate of 9.62%.”
How are I bonds taxed? (again, highlights are mine) -
“I bond interest is free of state and local income tax, and you can defer federal tax until you file a tax return for the year you cash in the bond or it stops earning interest because it has reached final maturity (after 30 years), whichever comes first. You can also report the interest every year, which may be a smart choice if you’d rather avoid one large tax bill years down the road. If you use I bond proceeds to pay for certain higher-education expenses for yourself, your spouse or your dependents, you may avoid federal tax.”
As I had been telling clients and readers for decades, claiming the accrued interest each year is a good idea for your young dependent children who do not have enough other income to have to pay federal income tax, as it will reduce the overall federal tax cost of the interest earned and substantially reduce the federal tax in the year the bonds are cashed.
* Be sure to check out the latest post at BOBSERVATIONS. And share with family, friends and colleagues. Thanks!
* Kay Bell warns us that “Offers to accelerate or increase student loan relief are scams” at DON’T MESS WITH TAXES -
“Beware of perps on the prowl with promises that they can get rid of your student loan obligation more quickly. Or get you even more loan relief if the federal plan doesn't cover all your college borrowing. Or help you avoid state taxes that apply to your canceled student debt.
All of these offers of help, most often by phone or email, will only help the scammers steal your money.”
According to K. Michelle Grajales, an attorney with the Federal Trade Commission's Division of Financial Practices, quoted in the post (highlight is mine) -
"You don't need to do anything or pay anybody to sign up for the new program — or the pause. Nobody can get you in early, help you jump the line, or guarantee eligibility.”
* And Kay also reminds us “Have a side hustle? Estimated tax payment on that money due by Sept. 15”.
* Over at ACCOUNTING TODAY Jeff Stimpson reports “Victims of Mississippi water crisis get filing relief”.
* Have you checked out my TAX PLANNING RESOURCE CENTER yet?
TTFN
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