U.S. Bonds Taxed Interest and Current Value

Question

Series EE Bond just matured and I cashed it in.

The current value that I received in cash was only a little more than the original face value.

However, the interest I am paying taxes on is half the amount of the original face value.

Why don't I see that amount when I cashed it in and why do I have to pay taxes on that amount?

Thank You.

@littleadv: paper. I think I figured it out, it was purchased for me when i was a kid, and I believe you purchase bonds for half of the face value....is that right? I have never used bonds before (never mind actual cash these days) so I am a complete idiot when it comes to this. Found this tool: savings-bond-advisor.com/savings-bond-calculator/#calc — Greg McNulty, Commented May 17, 2013 at 21:13
Exactly. Paper bonds were purchased at 50% discount, which is exactly the interest you're now paying. — littleadv, Commented May 17, 2013 at 21:21

littleadv · Accepted Answer · 2013-05-18 06:07:05Z

4

You got paper bonds. Paper bonds were purchased at 50% discount, which is exactly the interest you're now taxed on.

More information on EE and other bonds can be found at Treasury Direct web site.

answered May 18, 2013 at 6:07

littleadv

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