Members of the Maryland Association of Certified Public...

Tax answers

February 22, 1996

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.

Q: I purchased a savings bond in my brother's name so that he may eventually cash it and use it for educational purposes for his son. My brother and his ex-wife share custody of the son and claim him as a dependent on their taxes in alternate years. If my brother cashes the savings bond the year in which he's claiming the son and uses it for tuition at a qualified educational institution, will the interest be tax-free or will he have to pay some tax?

A: To qualify for the exclusion, the bonds must be Series EE U.S. Savings Bonds issued after 1989, and your brother must have been age 24 or older before the bonds were issued. The exclusion is subject to a phaseout beginning at $42,300 in adjusted gross income for singles and $63,450 for joint filers and is complete at $57,300 for singles and $93,450 for joint filers. Below the phaseout ranges, taxpayers may exclude bond interest up to the amount of the tuition and required enrollment fees. If your brother's filing status is married, filing separately, then the interest income will not be excluded from federal tax.

Q: I moved to Maryland in late 1995 and worked in the state just 10 days. Do I have to file?

A: Since you were a Maryland resident, you must file a Maryland return if you are required to file a federal return. However, only the income earned during the 10-day period of residency will be subject to Maryland tax.

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

A joint service from The Sun and the Maryland Association of Certified Public Accountants can help you with your tax queries. Association members, all CPAs, will answer questions from readers until April 15. To ask a tax question, call Sundial, The Sun's telephone information service, at (410) 783-1800. Using a touch-tone phone, enter 6225 after you hear the greeting.

Callers are asked to leave their names and phone numbers should questions need to be clarified. Selected questions will be answered in the Business section. No questions will be answered by phone. Names and numbers will not be published.

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