Form 8815: Exclude Savings Bond Interest for Education

The U.S. tax code allows for the exclusion of interest earned on certain savings bonds when the money is used for educational pursuits. This tax benefit is facilitated through IRS Form 8815, Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989. Navigating this exclusion requires meeting specific criteria related to the bonds themselves, the bond owner, how the funds are used, and the taxpayer’s income level.

Eligibility Requirements for the Exclusion

To qualify for the interest exclusion, the savings bonds must be either Series EE bonds issued after 1989 or any Series I bonds. The bonds must have been issued to an individual who was at least 24 years old before the bond’s issue date. The bonds must be registered in the taxpayer’s name or in the names of both the taxpayer and their spouse. Bonds registered in a child’s name as the owner or co-owner are not eligible for this tax exclusion.

The proceeds from cashing these bonds must be used to pay for qualified higher education expenses for the taxpayer, their spouse, or a dependent. Qualified expenses are tuition and fees required for enrollment or attendance at an eligible educational institution. Eligible institutions include most accredited colleges, universities, and vocational schools that are eligible to participate in federal student aid programs. Expenses that do not qualify include costs for room and board, transportation, or course-related books and supplies.

Eligibility is also based on the taxpayer’s Modified Adjusted Gross Income (MAGI), as the exclusion is phased out for taxpayers with MAGI above certain annual thresholds. For the 2025 tax year, the interest exclusion begins to phase out for married filing jointly filers with a MAGI over $149,250 and they become completely ineligible at $179,250. For single, head of household, or qualifying surviving spouse filers, the phase-out range is between $99,500 and $114,500. Taxpayers with a filing status of married filing separately cannot claim the exclusion at all.

Information Needed to Complete Form 8815

When you cash in savings bonds, you will receive a Form 1099-INT from the financial institution, which reports the total interest earned in Box 3. This is the first piece of information needed for Form 8815. It is also helpful to keep a separate record of the bonds you cash, including serial numbers, issue dates, and redemption proceeds.

You will also need complete records of the qualified higher education expenses paid during the tax year. The primary document for this is Form 1098-T, Tuition Statement, which you receive from the educational institution. In addition to Form 1098-T, you should collect any receipts, canceled checks, or other documents that substantiate the amounts paid for tuition and fees.

You must also determine the total of any tax-free educational assistance received during the year. This includes benefits such as scholarships, Pell Grants, veterans’ educational assistance, and employer-provided educational assistance that is not included in your income. The total of these tax-free benefits must be subtracted from your total qualified expenses, as you cannot claim an exclusion for expenses that were paid for with tax-free funds.

Calculating the Exclusion and Filing

The calculation on Form 8815 begins by entering the total interest from your cashed bonds and the total qualified higher education expenses paid. This expense amount is then reduced by the sum of any tax-free educational aid you received. The result of this calculation is your net qualified education expenses.

If your total bond proceeds, including both principal and interest, exceed your net qualified education expenses, you can only exclude a portion of the interest. The form guides you through a calculation to determine this proportional amount. If your MAGI falls within the income phase-out range for your filing status, you will complete a worksheet in the form’s instructions to calculate the final, reduced amount of your excludable interest.

The excludable amount determined on Form 8815 is reported on Schedule B (Form 1040), Interest and Ordinary Dividends. On Schedule B, you report the total savings bond interest from your Form 1099-INT, and then list the excludable amount from Form 8815 and subtract it from the total. The completed Form 8815 must be attached to your tax return when you file.