How to Cash Paper Savings Bonds

Paper savings bonds are a type of security issued by the U.S. government. Although new purchases are no longer in paper form, many individuals still hold physical bonds from past issuances, which can be converted into cash.

Understanding Your Paper Savings Bonds

Paper savings bonds primarily include Series EE and Series I bonds. Both types gain value through interest accrual over their lifespan, which can extend up to 30 years. Series EE bonds have a fixed interest rate, while Series I bonds feature a composite rate that adjusts with inflation. Understanding the current value and maturity date of your specific bonds is an important first step. You can determine a bond’s current value using the Savings Bond Calculator on the TreasuryDirect website, which requires the bond’s series, denomination, and issue date.

Information and Documents Required for Cashing

Cashing your paper savings bonds requires specific documentation to verify your identity and entitlement to the funds, including a valid government-issued identification (such as a driver’s license or passport). Your Social Security number or Taxpayer Identification Number is also necessary for tax reporting purposes. The physical paper savings bond(s) must be presented for redemption. If you plan to receive funds via direct deposit, your bank account information, including the routing and account numbers, will be required. The bond must be signed by the owner in the presence of an authorized official when presented for cashing, or properly certified if sent by mail.

Cashing Your Bonds at a Financial Institution

Many financial institutions, such as local banks and credit unions, offer paper savings bond cashing services. Contact your chosen institution beforehand to confirm they provide this service and inquire about any specific requirements or limitations. Some institutions may require you to be an existing account holder or impose limits on the total amount of bonds they can cash at one time.

When visiting a financial institution, present your valid government-issued identification and the physical paper savings bonds. After verification, funds are typically deposited directly into your bank account or disbursed as cash, depending on the institution’s policy and the amount.

Cashing Your Bonds Through TreasuryDirect

Cashing paper savings bonds through TreasuryDirect provides an alternative to in-person redemption. This method involves converting your paper bonds into electronic format within a TreasuryDirect account, which you must create if you don’t have one. Once established, you initiate a conversion process to link your paper bonds to your online account.

This conversion involves completing FS Form 1522, which requires details like the bond’s serial number and issue date. After completing the form online, print and mail it, along with the physical paper bonds, to TreasuryDirect for processing. Do not sign the back of the bonds before mailing them for conversion. Once processed and appearing in your online account, you can initiate an electronic redemption request.

Receiving Your Funds and Tax Reporting

After initiating the cashing process, funds are typically deposited directly into your designated bank account within two business days. The interest earned on savings bonds is subject to federal income tax but is exempt from state and local income taxes.

The U.S. Treasury or the cashing financial institution will issue Form 1099-INT, “Interest Income,” to report the total interest earned when the bond is cashed or reaches final maturity. This form is sent by January 31 of the year following redemption and helps accurately report your income when filing your federal tax return.