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9. Education Savings Bond Program What's New Modified adjusted gross income (MAGI) limits. For 2022, the amount of your education savings bond interest exclusion is gradually reduced (phased out) if your MAGI is between $85,800 and $100,800 ($128,650 and $158,650 if you file a joint return). You can't exclude any of the interest if your MAGI is $100,800 or more ($158,650 or more if you file a joint return). Introduction Generally, you must pay tax on the interest earned on U.S. savings bonds. If you don't include the interest in in- come in the years it is earned, you must include it in your income in the year in which you cash in the bonds. However, when you cash in certain savings bonds un- der an education savings bond program, you may be able to exclude the interest from income. Who Can Cash in Bonds Tax Free? You may be able to cash in qualified U.S. savings bonds without having to include in your income some or all of the interest earned on the bonds if you meet the following conditions. • You pay qualified education expenses for yourself, your spouse, or a dependent. • Your MAGI is less than $100,800 ($158,650 if married filing jointly). • Your filing status isn't married filing separately. Qualified U.S. savings bonds. A qualified U.S. savings bond is a series EE bond issued after 1989 or a series I bond. The bond must be issued either in your name (as the sole owner) or in the name of both you and your spouse (as co-owners). The owner must be at least 24 years old before the bond's issue date. The issue date is printed on the front of the savings bond. The issue date isn't necessarily the date of pur- chase—it will be the first day of the month in which the bond is purchased (or posted, if bought electronically). CAUTION ! Qualified education expenses. These include the fol- lowing items you pay for either yourself, your spouse, or a dependent. 1. Tuition and fees required to enroll at or attend an eligi- ble educational institution. Qualified education expen- ses don't include expenses for room and board or for courses involving sports, games, or hobbies that aren't part of a degree or certificate-granting program. 2. Contributions to a qualified tuition program (QTP) (see How Much Can You Contribute in chapter 7). 3. Contributions to a Coverdell education savings ac- count (ESA) (see Contributions in chapter 6). Adjusted qualified education expenses (AQEE). You must reduce your qualified education expenses by all of the following tax-free benefits. 1. Tax-free part of scholarships and fellowship grants (see Tax-Free Scholarships and Fellowship Grants in chapter 1). 2. Expenses used to figure the tax-free portion of distri- butions from a Coverdell ESA (see Qualified Educa- tion Expenses in chapter 6). 3. Expenses used to figure the tax-free portion of distri- butions from a QTP (see Qualified Education Expen- ses in chapter 7). 4. Any tax-free payments (other than gifts or inheritan- ces) received as educational assistance, such as: a. Veterans' educational assistance benefits (see Veterans' Benefits in chapter 1); b. Qualified tuition reductions (see Qualified Tuition Reduction in chapter 1); or c. Employer-provided educational assistance (see chapter 10). 5. Any expenses used in figuring the American opportu- nity and lifetime learning credits. See What Expenses Qualify in chapter 2 (American opportunity credit), and What Expenses Qualify in chapter 3 (lifetime learning credit), for more information. Eligible educational institution. An eligible educa- tional institution is any college, university, vocational school, or other postsecondary educational institution eli- gible to participate in a student aid program administered by the U.S. Department of Education. It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) postsecondary institutions. The edu- cational institution should be able to tell you if it is an eligi- ble educational institution. Certain educational institutions located outside the Uni- ted States also participate in the U.S. Department of Edu- cation's Federal Student Aid (FSA) programs. Dependent. A person who qualifies as your depend- ent will be listed by name in the Dependents section of your Form 1040 or 1040-SR. See the Instructions for Form 1040. Page 56 Chapter 9 Education Savings Bond Program