Where to cash treasury bonds depends on the type you own

Treasury bonds can be cashed through the U.S. Department of the Treasury's online platform, TreasuryDirect, or through a bank or broker. If you own paper bonds issued before 2002, you must go to a bank. If you own bonds held in a TreasuryDirect account (the digital system the Treasury has used since 2002), you redeem them online. If a broker holds your bonds, you contact the broker to sell or redeem them.

The method matters because it determines how long the process takes, whether you pay a fee, and what information you need to have ready. Paper bonds require a trip to a bank and manual processing. Digital bonds in TreasuryDirect can be redeemed in minutes. Broker-held bonds depend on the broker's systems and may involve a small transaction fee.

Key Takeaways

  • Paper Treasury bonds must be cashed at a bank; the bank verifies your identity and sends the bond to the Treasury for processing, which takes one to three weeks.
  • Bonds held in your TreasuryDirect account can be redeemed online in minutes, with funds deposited to your linked bank account within one business day.
  • Bonds held by a broker are sold through the broker's platform, and you receive the sale price minus any transaction fees.
  • You will owe federal income tax on the interest your bond earned, but not state or local income tax on Treasury bonds.

Cashing paper Treasury bonds at a bank

If you hold physical paper bonds, take them to any bank where you have an account. You do not need to use the bank that issued the bond. Bring the bonds themselves, a valid photo ID, and your Social Security number. The bank will ask you to sign the back of each bond and will verify your identity.

The bank then sends the bonds to the Federal Reserve on your behalf. Processing takes one to three weeks. Once the Treasury receives and processes the bond, the bank deposits the redemption amount into your account. You will receive a 1099-INT form from the Treasury at tax time reporting the interest you earned.

Some banks charge a small fee for this service, typically $15 to $25 per bond. Call ahead to ask whether your bank charges and what the fee is. If your bank declines to process the bond, you can mail it directly to the Treasury, though this takes longer and requires more paperwork.

Redeeming bonds through TreasuryDirect online

If your bonds are registered in a TreasuryDirect account, log in at treasurydirect.gov using your username and password. Navigate to the "Manage My Securities" section and select the bond you want to redeem. Confirm the redemption amount and the bank account where you want the funds deposited.

Once you submit the redemption request, the Treasury processes it immediately. Funds are deposited to your linked bank account within one business day. You do not need to visit a bank or pay a fee. The Treasury will send you a confirmation email and will report the interest on a 1099-INT form at tax time.

TreasuryDirect redemptions work only if you have an active account and the bond is registered there. If you inherited a bond or received one as a gift and it is not yet in your TreasuryDirect account, you will need to register it first, which requires additional steps and identity verification.

Selling Treasury bonds through a broker

If a brokerage firm holds your Treasury bonds, you can sell them through your brokerage account. Log in to your account, find the bond in your holdings, and place a sell order. The bond is sold on the secondary market at the current market price, which may be higher or lower than the face value depending on interest rates and the time remaining until maturity.

The sale settles in one to two business days, and the proceeds are deposited into your brokerage cash account. You can then transfer the money to your bank. Most brokers charge a small transaction fee per bond, ranging from $5 to $25. The broker will report the sale on a 1099-B form at tax time if you sold at a gain or loss.

Selling on the secondary market is different from redeeming at maturity. You receive the current market price, not the face value. If interest rates have risen since you bought the bond, the market price will be lower. If interest rates have fallen, the market price will be higher. This is why some people hold bonds to maturity instead of selling early.

What happens if your bond has matured

If your bond has reached its maturity date, the Treasury will no longer pay interest on it. You should redeem it as soon as possible after maturity because holding a matured bond earns nothing. For paper bonds, take it to a bank. For TreasuryDirect bonds, redeem it online. For broker-held bonds, sell it or contact your broker to redeem it at face value.

If you have lost track of whether a bond has matured, you can check the maturity date on the bond itself (for paper bonds) or in your TreasuryDirect account (for digital bonds). The maturity date is printed clearly on the front of paper bonds. In TreasuryDirect, select the bond and look at the "Maturity Date" field.

Tax reporting when you cash a Treasury bond

When you redeem a Treasury bond, you owe federal income tax on the interest it earned, but not state or local income tax. The interest is taxable in the year you redeem the bond, not the year you bought it. For example, if you bought a bond in 2020 and redeemed it in 2024, you report the interest on your 2024 tax return.

The Treasury will send you a 1099-INT form showing the interest amount. Use this form to report the interest on your federal tax return. If you sold a bond through a broker at a gain or loss, the broker will send you a 1099-B form showing the sale price and your gain or loss. Consult a tax professional if you are unsure how to report the transaction.

What to do if you cannot find your bonds

If you own paper bonds but cannot locate them, contact the Treasury's Bureau of the Fiscal Service at 844-284-2676 or visit treasurydirect.gov. You can file a claim for lost or stolen bonds. The Treasury will research whether the bond was ever redeemed and, if not, can issue a replacement or process a claim for the value.

If you think you own bonds but are not sure, search the Treasury's unclaimed property database at treasurydirect.gov or contact your state's unclaimed property office. Some bonds end up in state custody if the owner cannot be located. The search is free and takes a few minutes.

Frequently Asked Questions

Can I cash a Treasury bond before it matures?

Yes. Paper bonds can be cashed at any bank. TreasuryDirect bonds can be redeemed online. Broker-held bonds can be sold. However, if you redeem before maturity, you may lose some interest. Series EE and I bonds have penalties for early redemption within the first five years.

What if I inherited a Treasury bond?

You can cash it, but the process depends on whether it is a paper bond or held digitally. For paper bonds, take it to a bank with a copy of the death certificate and your ID. For TreasuryDirect bonds, the estate executor must register the bond in their name first, then redeem it. Contact the Treasury for specific instructions.

Do I pay taxes when I cash a Treasury bond?

You do not pay a tax at the time of redemption. However, you owe federal income tax on the interest the bond earned. The Treasury sends a 1099-INT form at tax time. State and local taxes do not apply to Treasury bonds.

How long does it take to get my money after I redeem a bond?

TreasuryDirect redemptions deposit funds within one business day. Paper bonds cashed at a bank take one to three weeks because the bank must send the bond to the Federal Reserve. Broker sales settle in one to two business days.

What if my bank refuses to cash my Treasury bond?

Some banks no longer process paper bonds. If yours declines, you can mail the bond directly to the Treasury's Bureau of the Fiscal Service with a completed form and your ID copy. Processing takes longer this way, typically four to six weeks. Contact the Treasury at 844-284-2676 for mailing instructions.