Paying taxes on taxable bonds can be a little tricky for many people. The IRS in their own right like to help out people with taxes, even going as far as to make suggestions on how to they can save in taxes. However, the ways that they present the information makes the taxpayer wonder about their so-called helpful intentions.
Take for example these bonds. Now, not all-ordinary people know about the way tax is split on the interest. People who own these bonds know that the interest is paid twice a year. But what most are not aware of is the fact that if they bought a bond after the first payment of the interest had been paid, they only had to pay taxes on half the interest they would pocket that year.
For example, Joe bought his bonds on June 17th. The payment schedule is March 1st and September 1st. Due to the fact that the first payment has already been made, Joe only has to pay tax on half his interest check. Now we know that this saving strategy for bonds is not going to save your clients tons of money like some other commonly overlooked or unknown strategies, but we are firm believers in the fact that every little bit counts and it all adds up. Does anyone really want to dish more of their hard earned money out to the IRS than they absolutely have to? We thought not!