Tax Facts

7685 / Can a child owning Series E or EE bonds elect to include interest?

According to IRS Publication 550, if a child is the owner of an E, EE, or I bond, the election to report interest annually may be made by the child or by the parent. The choice is made by filing a return showing all the interest earned throughout the year and stating that the child is electing to report interest each year. The child then does not have to file another return until he or she has enough gross income during a year to require filing.


A child could elect to change from annual to deferred reporting under Revenue Procedure 89-46. This provision is not included in the current revenue procedure governing such elections.1 However, Publication 550 states that neither the parent nor the child can change the way that interest is reported unless permission from the IRS is requested (in accordance with the procedures outlined in Q 7679). Thus, it appears that a child may make such election. If the election is available, the parent of a child making such an election may sign Form 3115 on behalf of the child. See Q 679 for an explanation of the taxation and filing requirements of children under age 14.





1.   Rev. Proc. 2002-9, 2002-1 CB 327.


Tax Facts Premium Tools
Calculators
100+ calculators specifically designed to help you easily assist clients with specific planning situations and calculations.
Practice Guidance
Designed to help you discover new ways for which to build and maintain client relationships.
Concepts Illustrated
Specifically designed to help you easily assist clients with specific planning situations and calculations.
Tax Facts Archives
Access to the entire library of Tax Facts dating back to 2012 allowing you to look up the exact tax figures from prior years.