<p>My son is in Europe on semester abroad. Before he left, we agreed it would be easier if I did his taxes for him, rather than mailing him his W2’s, etc. </p>
<p>He had a part-time job last year, which withheld taxes (I told him to write EXEMPT on the W4 but the Human Resources lady told him to do it differently and he listened to her, so they withheld taxes even though I knew he wasn’t going to earn enough to owe anything), and a small amount of dividend income from some stocks his grandparents gave him. I thought that was it, and I had the W2s and 1099, so Friday night I e-filed for him. He’s entitled to get the entire amount he paid in fed tax back. That return is listed as “pending.”</p>
<p>BUT… today we got a 1099 for $6000 in interest he received when we cashed in his Savings Bonds last summer. I had completely forgotten about that. My questions are:</p>
<p>A) Is that Savings Bond interest taxable? We used it all for college. It was cashed in under his SS#.</p>
<p>B) How do I fix this? According to the e-file website, I will have to file a paper 1040X. </p>
<p>C) If his online return is accepted, his refund will be direct deposited to his checking account. If it turns out he actually owed money, I guess I will have to send the IRS a check for the amount of the refund plus the amount he owes?</p>
<p>The bonds were in his name either as co-owner or beneficiary, and they were cashed in under his SS#. We make too much to qualify for the education exclusion. (So I guess the answer to question A is yes, it is taxable).</p>
<p>Were they college bonds (Series I maybe)? We have a lot of these somewhere too - they’re earning a great rate of return (considering market rates) so we still have them.</p>
<p>Under certain circumstances, the interest on U.S. savings bonds (series EE and series I) issued after December 31, 1989, is exempt from tax if the bonds are used for educational purposes. See Publication 550 for further information.</p>
<p>issued after december 31, 1989… hmmmm… once again, screwed. better check those bonds owned by my S#2 who was issued in March of 1989.</p>
<p>So yes, they are taxable. You must now fild an amended return and pay in what was refunded, plus what is owed, but the good news is you have until April 15 to do it with no interest or penalty. The 1040X cannot be efiled.</p>
<p>Yes they are taxable. Bonds are only tax free for education if the owner was 24 or over when they were purchased. One of the dafter tax rules around. You would think buying your kids bonds to save for college would be a good thing.</p>
<p>^^^Swimcatsmom, I agree. My kids got a bunch of savings bonds in their names as baby gifts – how did those folks know our kids would be so expensive to educate? – and they are taxable.</p>
<p>Back when DS was little, I somehow got wind of reporting the annual accrued interest on his good old classic Savings Bonds. Essentially I filed a tax return in his name reporting all the interest to date. That established election of annual reporting. I then kept track of the increase every year, and when he started earning money in late high school just reported the annual increase again on his returns. When we cashed them in, all he had to report was the last year of interest. Between his baby and bar mitzvah bonds, we saved a lot on taxes - and all perfectly kosher. </p>
<p>I highly recommend looking into this for parents with younger kids with bonds and no other income.</p>
<p>My dad used to report our bond interest every year, and when we finally cashed them in we owed almost nothing. But I was too lazy to do that…</p>
<p>Gah, I’d have done all this correctly if I’d just remembered that we had cashed them in last summer! Darn Bank of America for sending the 1099-int so that it arrived the day AFTER I e-filed.</p>
<p>forgive me for hijacking this thread, but does my son, who is now 21, need to file a W2 for receiving $5000 for an internship at his college last summer? he just received a 1099 statement for that amount. he also receives a full tuition scholarship from said college and has for 3years. The IRS rules are confusing. Since his income is below $9350 does he need to file?</p>
<p>I think that the threshold for filing is between $5,000 and $6,000. The best thing to do is to run it through tax software to determine whether or not he has to file. My son received a bit more for an internship and taxes were withheld so he would have to file to get his withholdings back.</p>
<p>“I think that the threshold for filing is between $5,000 and $6,000.”
that’s what I thought too, but can’t find anything on the IRS website. What it does say is if he is single, under the age of 65, and has income below $9350 he does not need to file. Nothing was withheld, the lump sum was just deposited directly in his bank account.</p>
<p>I think that it’s a function of the exemption - an exemption of 1 is somewhere between $5,000 and $6,000. If you make less than the exemption, then you wouldn’t have a tax liability. I’m running on Mac OS X right now and can’t boot to Windows (work to do). I have Tax Act installed and it would show a 1040 form with the value of exemptions to multiply by the number of exemptions. I think that a 1040 form would have this on page 2.</p>
<p>I think your questions really is: does he need to file a tax return, not a W-2. A W-2 is a form provided by an employer to an employee.</p>
<p>If you are claiming your son on your return, he needs to file if his EARNED income is over $5,700. If you don’t claim him, he also gets his own personal exemption of $3,650. That’s where the $9,350 comes from. If he has unearned income on top of that, the standard deduction is different. </p>
<p>The filing requirements also depend on what kind of 1099 he received. If the income was a taxable scholarship and it’s under $5,700 then he doesn’t need to file. If it’s unearned income, ie… a 1099INT or a 1099DIV then he may. If it’s a 1099 MISC, then it’s considered self employment income and he has no tax liability, but he needs to file to pay the self employment tax.</p>
<p>wait, he has to pay self employment tax even if he was paid less than $5700?[ it was a MISC 1099] he was not self employed! he was paid for an internship- working for a college prof doing research.</p>
<p>Yes. He was working for a college professor doing research and was not considered an employee. Had he been an employee, they would have withheld taxes and social security and issued a W-2. If it was a scholarship, they would have considered it that. But apparently, they consider him an independent contractor, and because they did not withhold the social security and medicare taxes, then he has to pay them himself on his return. He has to file if he has self employment income of over $400.</p>