- quote -

However, from http://www.publicdebt.treas.gov/sav/savreis4.htm,

"The principal co-owner is presumed to be entitled to the interest earned
and responsible for the taxes."

woessner[at]gmail.com wrote:
- quote -


I think I figured it out; I'll let the experts determine if it would
actually work.

If the bonds were purchased after January 1991, he gets the Treasury to
reissue the bonds with Son as the second-named co-owner (he can't get
the son added as first owner.) Then the son cashes the bonds and uses
the proceeds to pay the girl's college expenses (he claims her as a
dependent) and takes that college exemption.

Wha'd'ya think?

Bob

- quote -

I would be very careful with this. According to Pub 970, you can only
claim the deduction if "the eligible student is yourself, your spouse,
or a dependent for whom you claim an exemption on your tax return."
The same goes for the Hope and Lifetime Learning Credits.

So in order for grandpa to get the deduction, he would have to claim
the child as a dependent. I know that's possible, but I'm sure about
the specifics.

--Bill

On Wed, 07 Jun 2006 14:19:38 -0500, nosmo king wrote:

- quote -

They could redeem the bonds and use the proceeds to fund a 529 in a
grandparent's name. The grandparent most likely wouldn't be continuing
their higher education so make the grandkid the beneficiary. As long as
it's less than 55K there shouldn't be any gift tax issues. I would suggest
you do further research before you start redeeming the bonds..I would
suggest this: http://www.foxnews.com/story/0,2933,128954,00.html

Good luck

nosmo king wrote:
- quote -


What year were the bonds issued? (if *you* have any EE or I bonds
issued after 1990 you should consider cashing them in the same tax year
that you pay some of Daughter's college expenses. The interest will be
tax-free if you do it right.) I don't think Grandpa can take advantage
of this because she is not his dependant, but I dunno.

Bob

Grandpa would also get to remove the assets from his taxable estate and
if paid directly to the institution he may get a $4K or so income tax
deduction.


Gary Brolis
http://www.mechanicsofmoney.com
http://www.mechanicsofmoney.com/blog.php


nosmo king wrote:
- quote -

Are there any tax advantages available for a grand-parent to pay for a
grand-child's college education ? My Dad has some old EE bonds that he
wants to give to my daughter to help pay for college. He doesn't need
the money and doesn't want to pay the tax on the bonds (letting her
cash them and pay the tax). He also has other funds available if the
bonds are not an option.

He thought he had heard there were options for him to pay the tuitiion
directly to the school, while getting a tax deduction for the donation.
The only thing I am aware of is to be able to bypass the gift tax (for
over $12k) by making the direct payments.

Thanx.