Oregon Tax Consultants Practice Exam

If you file a married filing separately tax return, can you exclude US Savings Bond interest if you have qualified education expenses?

1. Yes, you can fully exclude

2. No, exclusions do not apply

3. Only partially exclude

4. It depends on income level

The correct answer is: No, exclusions do not apply

When filing a married filing separately tax return, exclusions related to U.S. Savings Bond interest for qualified education expenses do not apply. The law specifies that in order to exclude interest earned on U.S. Savings Bonds used for qualified education expenses, taxpayers must file a joint return. This is set forth in the tax regulations governing the exclusion of interest on these bonds, which aims to provide a benefit primarily to those who are filing jointly, thus fostering family financial stability. This restriction underlines the necessity of filing jointly to access certain tax benefits, which can create hurdles for individuals choosing to file separately. While there are income limits for the exclusion when filing jointly, those do not change the requirement that only joint filers can take advantage of this benefit. Therefore, the answer accurately reflects the limitation that married individuals must file jointly to claim the exclusion for US Savings Bond interest.