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US Savings Bonds and Taxes

Millions of Americans own U.S. savings bonds. They are the perfect gift for a newborn and young children you want to teach habits of thrift. U.S. savings bonds also get special tax treatment and can be used as a higher education funding tool for some taxpayers. We will focus on the tax benefits of Series EE, Series HH and Series I savings bonds in this article. 

We will start with the basics of each series of bond followed by tax benefits and potential tax pitfalls surrounding savings bond ownership. A savings bond calculator is provided at the end of this post so you can find the current value of U.S. savings bonds you currently own.

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Investing in a Retirement Account is Like Taking Out a Loan

Traditional retirement plan contributions come with a loan attached to it with a variable rate of interest, to be determined at a later date by the tax code and your income level.

We all know that traditional retirement accounts get a tax deduction at your ordinary tax rate to the retirement plan contribution limits. We should also know that these account grow tax-deferred and that all distributions are taxed at ordinary rates.

This is a real problem if your goal is to maximize your net worth. In the early years the tax benefit makes it seem like it is the best deal on the planet. But as time passes the math tells a darker tale.

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Permanent Interest Free Loans

Credit cards were always a powerful cash management tool for business owners. Individuals can harness the same power, but frequently use credit cards wrong, piling on high interest debt, and suffering financially. In times past, credit cards allowed for easy payment and tracking of expenses. As banks grew more competitive, the opportunities also grew. Most people are familiar with cash-back and bonus offers when opening a new credit card, but there is so much more.

There is a whole additional universe of value available from credit cards missed because it is buried in fine print. In this post we will focus on one of those benefits: interest free loans. Tomorrow I will focus on the litany of advantages you can use to make your life simpler.

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