My friend wants to use my name to buy treasury bonds? is it OK? what are the risks? i don't know much about it

Question

My friend wants to use my name to buy treasury bonds? is it OK? what are the risks? i don't know much about it

Answer 1

Ok - It does sound a little fishy that he doesn't want to use his own name and social but this could be a result of not wanting to report the income/asset due to SSI benefits, etc...  Did he disclose the reason to you and are you comfortable with it??

A lot of people are giving you wrong info.  If they are US Savings Bonds, the tax is reported on the person who actually cashes the bond, not the person who purchases them.  And, you only pay interest on (E,EE, I and more)bonds the year they are cashed, not for every year you hold the bond.  So you would not be held liable for this either.  It also depends on the titling of the bonds, is their going to be a co-owner?

Feel free to give me more info and I can give you more assistance!

Answer 2

Don't let him do it. The owner of the bonds will incur all the tax obligations associated with them. Even if you don't wind up owing money, you'll have to keep track of them and report them on *your* tax returns each year. Why would you go through this bother for a friend? Why doesn't he want the IRS to know he's the actual owner. Something sounds fishy there. Stay away.

EDIT: Treasury bonds are not the same thing as savings bonds. Treasury bonds pay interest every six months. They are exempt from state and local taxes, but they *are* subject to federal income tax. The owner (purchaser) of the bond gets a form 1099-INT every year, showing how much interest has been paid out. The owner (purchaser) of the bond will be the one that needs to report that interest to the IRS each year.

My original advice stands.

Answer 3

Don't let him. You will get hit with taxes at least state wise