Tax-free redemptions using gifts to charities
Is there any way to avoid paying taxes on Savings Bond interest - for example, signing them over to a relative, transferring them to a grandchild's education fund, or perhaps signing them over to a charity? Tom's response You can cash the bonds and give the amount of the interest income to a recognized charity. The charitable deduction, which you report on 1040 Schedule A will offset the interest income, which you report on 1040 Schedule B. However, if this pushes your income high enough to entangle you in the Alternative Minimum Tax (AMT), it may be less than 1 for 1. There are no other ways to avoid paying the tax.