Declaring interest on unredeemed bonds

I have referred to your website many times and I just ordered your book. My 17-year-old son has series EE bonds that now approach 10k in value. I want to have him file a tax return this year to pay the accrued interest now and then begin paying it annually before he is in a higher tax bracket. He's never filed a return before. How do I go about this? Tom's response First, even if you use a tax advisor for your own returns, if you son has no other income, you can do this one yourself, as it's not very complicated. Here's a link to a blank copies of IRS Form 1040 and Schedules A & B. Ignore Schedule A, but you'll need to use Schedule B if the interest income is over $1,500. Just open the forms, fill them out, and send them in. It will probably work best for you to continue to claim your son as a dependent on your return, which means he can't claim himself, so don't check box 6a on the 1040. The IRS says you don't need permission to change to reporting Savings Bond interest annually, but you'll pay tax on this interest each year from now on. If you ever decide to switch back, you need to file IRS Form 3115, but again permission to change in automatic. You'll need to know the total amount of interest earned by the bonds through Dec 04, which you can figure out from my book. There are two columns in the tables that help calculate interest, one is for 2004 only and one is for "issue date through Dec 2004". Use the second number and just multiply it by the face value of the bond. For example, for a Jan 1990 EE bond the interest number is 0.6224. If you have one of these with a face value of $100, it's earned $62.24 in interest. (Double check - in December its value was $112.24, minus the $50 you paid for it, leaves $62.24 interest.) Since Savings Bond interest isn't state-taxable, your son probably won't even meet the minimum requirement for filing a state tax form, but you might want to check this out. Most states now offer online forms you can fill out and submit pretty easily. On the state tax, you'd include the interest in his income, then deduct it in the adjustments section related to federal interest income.