The taxpayer can exclude interest income from Series EE and Series I US Savings bonds if all of the following are true:
- The bonds were issued after 1989;
- The person in whose name the bonds were issued was age 24 or older before they were issued;
- The bonds were cashed in during the during tax year;
- The taxpayer paid qualified higher education expenses;
- The filing status on the return is not MFS;
- Modified AGI is less than a threshold for the taxpayer's filing status. The modified AGI thresholds change annually - see the Form 8815 instructions for the current year's thresholds.
To complete Form 8815 you will need to enter all the taxpayer's 1099-INTs (and 1099-DIVs) individually in the tax return, i.e., you can't summarize them if the total of each is under $1,500. If you find the Form 8815 menu is starred and inaccessible, remove the amount of interest and dividends already entered under the Interest and Dividends < $1500 menu.
First, enter the 1099-INT(s). From the Main Menu of the tax return (Form 1040) select;
- Interest or Dividends (Sch B, 8815) - Click New, then select Form 1099-INT.
- Enter the payer's name and the Box 1 or 8 amounts, if any, then click Ok.
- Interest on US Savings Bonds - Enter the amount of US Savings Bond interest.
Next, complete Form 8815 from the Schedule B - 1099 Transactions window as follows:
- In the Schedule B - 1099 Transactions window, click the Other button.
- Select Schedule B Questions\Form 8815.
- Select Excludable Interest from Form 8815.
- Select Name of Person and Eligible Educational Institution.
- Click New, then select the individual on the return with qualified education expenses.
- Enter the educational institution information.
- Select Exit twice to return to the Form 8815 menu and complete the remaining menu lines as needed:
- Total Qualified Higher Education Expenses - Enter the amount of qualified education expenses. These include tuition and fees. They don't include room and board, nor fees for sports or games unrelated to the student's degree program. They also don't include (a) expenses covered by nontaxable benefits paid to or by the institution, (b) expenses used in calculating an education credit on Form 8863, or (c) expenses used to calculate the nontaxable amount of a distribution from a Coverdell ESA or a QTP.
- Total Non-taxable Educational Benefits - Enter the amount of qualified education expenses included in the previous entry that were covered by nontaxable educational benefits paid directly to the student. (As with the previous entry, don't include nontaxable benefits paid to or by the institution.)
- Proceeds from All Series EE US Savings Bonds - Enter total amount, principal plus interest, received from Series EE and Series I bonds cashed in during the year.
- Interest Portion of Proceeds - Enter the portion of the amount received that is interest.
Note: This is a guide to completing Form 8815 in the TaxSlayer Pro program. It is not intended as tax advice.