I cashed EE savings bonds and used some of the money to pay my student loan payments this year (graduated '13). Can I use Form 8815 to exclude savings bond interest?

Forum|Forum|6 years ago
June 1, 2019
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I graduated college in 2013 and still have student loans. I cashed my post-1989 EE savings bonds in 2018 and used some of it to pay for my monthly student loan payments every month in 2018. Can I use Form 8815 to exclude some of the interest from my taxable income?

TurboTax Deluxe Online

Cindy0H

Employee

No. Student loan interest is not a qualified education expense.

The savings bond education tax exclusion permits qualified taxpayers to exclude from their gross income all or part of the interest paid upon the redemption of eligible Series EE and I U.S. Savings Bonds issued after 1989, when the bond owner pays qualified higher education expenses at an eligible institution.

Qualified educational expenses include:

Tuition and fees (such as lab fees and other required course expenses).
Expenses that benefit you, your spouse, or a dependent for whom you claim an exemption.
Expenses paid for any course required as part of a degree or certificate-granting program.
Expenses paid for sports, games, or hobbies qualify only if part of a degree or certificate program.

Note: The costs of books or room and board are not qualified expenses.

NEWM226

Can someone clarify this? Everything I read on the IRS site for tax benefits for education expenses (https://www.irs.gov/publications/p970) makes it sound like you can fill out Form 8815 as a qualified savings bond interest exclusion. You cannot claim both student loan interest deduction and the savings bond interest exclusion. If you're like me and at the end of your student loans and therefore have a lower student loan deduction it makes more sense to me to cash in savings bonds to gain the interest exclusion benefit and not claim the student loan interest deduction. Does anyone have any more specific experience with this?

AmyC

Employee

No, you can not claim the interest according to your Pub 970 link. @NEWM226

Education Savings Bond Program says:

Who Can Cash in Bonds Tax Free?

You may be able to cash in qualified U.S. savings bonds without having to include in your income some or all of the interest earned on the bonds if you meet the following conditions.

You pay qualified education expenses for yourself, your spouse, or a dependent.
Your modified adjusted gross income (MAGI) is less than $96,100 ($151,600 if married filing jointly).
Your filing status isn't married filing separately.

and then it says for Qualified Expenses:

Qualified education expenses.

For purposes of the 10% additional tax, these expenses are tuition, fees, books, supplies, and equipment required for enrollment or attendance at an eligible educational institution. They also include expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance.

In addition, if the student is at least a half-time student, room and board are qualified education expenses.

The expense for room and board qualifies only to the extent that it isn't more than the greater of the following two amounts.

The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.
The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution.

You may need to contact the eligible educational institution for qualified room and board costs.

Yet another government agency stating you can not claim the interest.

Individual - Education Planning - TreasuryDirect

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