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Savings-Bonds-Alert: How Series H/HH bonds work

Monday, October 25, 2004

How Series H/HH bonds work

I'm trying to understand why, when an H Bond is cashed in, only the face value is paid. When an H Bond is cashed, are taxes due on all the past interest paid, plus the face value of the bond? Tom's response The interest earned by Series H/HH bonds is paid to you semiannually, so there is no growth in the face value. You pay income tax on this interest each year. However, these bonds do carry deferred interest from the Series EE bonds that were turned in to obtain the H/HH bonds. So when you cash in the bonds, you do have to pay tax on that interest. The amount of deferred interest the bond carries - and that you have to pay tax on when you redeem the bond - is printed on the front of the bond. Click here for more information on Series HH Savings Bond features.


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