ERIC Number: ED315007
Record Type: Non-Journal
Publication Date: 1989-Oct-16
Reference Count: N/A
Education Savings Bonds: Eligibility for Tax Exclusion. CRS Report for Congress.
This report discusses eligibility for a new Federal income tax exclusion created by the Technical and Miscellaneous Revenue Act of 1988 for U.S. savings bonds used to pay qualified higher education expenses. The exclusion enables eligible taxpayers to leave out of their gross income the interest earned on series EE savings bonds that are used for tuition and required fees, net of scholarships, for themselves or their spouses or dependents. Taxpayers must be at least 24 years of age and the full exclusion is limited to taxpayers with modified adjusted gross incomes below $60,000 for married couples and $40,000 for single taxpayers or heads of households. As the exclusion will be available only for series EE bonds issued after 1989, it is not likely to be widely used during the next several years. Analysis of eligibility of current students, however, assuming that the exclusion had been previously available, suggests that more than half of all current students (more than 6 million graduate and undergraduate students) and their families would be eligible to use the full exclusion. The most significant restrictions are the purchaser's age limitation and the qualified expenses limitation, which would affect families of students who receive scholarships at public colleges and universities. (DB)
Publication Type: Reports - Descriptive
Education Level: N/A
Sponsor: Congress of the U.S., Washington, DC.
Authoring Institution: Library of Congress, Washington, DC. Congressional Research Service.