This is a series of Frequently Asked Questions about education and savings bonds.

1) ABOUT THE EDUCATION TAX EXCLUSION

1.1) What is the Education Tax Exclusion?
1.2) Is there a new series of bonds which must be purchased to take advantage of this feature?
1.3) What educational expenses are eligible?
1.4) What qualifies as an eligible educational institution?
1.5) Can all outstanding bonds be used to qualify for the exclusion?


2) WHO'S ELIGIBLE?

2.1) Can anyone purchase these bonds and take advantage of the exclusion?
2.2) Can anyone take advantage of the interest exclusion by purchasing bonds as gifts?
2.3) What about registering the bond in the parent and child's name as co-owners?
2.4) Can a child be named as beneficiary on a bond for which the interest exclusion will be taken?
2.5) Does the education exclusion affect savings bonds that have been or are being purchased by a parent registered in the name of a child alone, or the child's name with the parent as beneficiary?
2.6) I may not qualify for the Education Bond Program. Are there any other options?

3) DOLLAR LIMITS

3.1) Do both the principal and interest from bonds redeemed during the year have to be used for qualified educational expenses to exclude the bond interest from gross income?
3.2) What if the amount of the bond redemption proceeds exceeds the amount of the qualified educational expenses?
3.3) Are there income limitations?
3.4) What is modified adjusted gross income?
3.5) What benefits, if any, are there for taxpayers who file jointly with modified adjusted gross incomes above $83,650 (or $55,750 for single filers) in 2001, and $86,400 (or $57,600 for single filers) in 2002?
3.6) Are these income limits adjusted for inflation?


4) BUYING BONDS FOR THE EDUCATION TAX EXCLUSION

4.1) How does one buy an "Education Savings Bond"?
4.2) Where can I buy Series EE and I Bonds?
4.3) Are there limitations on the denomination of the bonds used?
4.4) Is there a limitation on the number or amount of Series EE and/or I Bonds one can buy?
4.5) I just realized that the bonds for our children's education are in the wrong names--theirs, not ours. As I understand it, this wouldn't qualify for the tax exemption. Can I change the names?

5) CLAIMING THE EDUCATION TAX EXCLUSION

5.1) What are the redemption procedures for holders of qualified bonds?
5.2) How does one exclude the interest income on the tax form?
5.3) Will the educational institution be required to verify the educational expenses of the taxpayer, taxpayer's spouse or the taxpayer's dependent?
5.4) Can one exchange Series E or EE bonds issued before January 1, 1990, for new Series EE bonds or I Bonds to make them eligible?
5.5) What happens if bonds dated before January 1, 1990, are redeemed and new bonds are bought with the proceeds?



This FAQ is maintained by the Bureau of the Public Debt's Savings Bond Operations Office. Keep in mind that these questions may not fit all situations and are only intended as guidelines. Please send any questions or comments to: [email protected] .