Exclusion Rules

Interest from qualified savings bonds redeemed by the taxpayer can be excluded from income if:

•  The taxpayer paid qualified education expenses during the year for the taxpayer, spouse, or a dependent claimed on the taxpayer’s return.
•  Filing status is not Married Filing Separate.

If proceeds from the redemption (interest and principal) are more than adjusted qualified education expenses, only a percentage of the interest is excludable.

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