Paper I-Bonds Purchases With Tax Return

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Paper I-Bonds Purchases With Tax Return

Postby jah » Wed Jan 23, 2013 9:20 am

Hello all!

It is my understanding that the only way to purchase paper I-bonds is using your IRS tax return ($5,000 per SSN). Does one need to be receiving a refund in order to purchase I-bonds using your federal tax return? For example, if I wanted to purchase $5,000 worth of I-bonds does my tax refund need to be at least this amount. I could not find any information on the IRS website that indicated that I-bonds could be purchased if you owe tax. Truly a shame, because I would include payment in my IRS tax return check for I-bonds if I could purchase them.

Jason
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Re: Paper I-Bonds Purchases With Tax Return

Postby dickenjb » Wed Jan 23, 2013 9:36 am

jah wrote:Does one need to be receiving a refund in order to purchase I-bonds using your federal tax return?

Jason


Yes.

Start planning to be overwithheld for 2013 if you want to do this on next year's return.

http://www.bogleheads.org/wiki/I_Saving ... Tax_Refund

Please note that I believe the wiki is wrong on the limit. I believe it is $5000 per return, not $5000 per SSN. I will update the wiki once I have confirmed this as I will be asking my CPA to fill out Form 8888 to get the maximum amount in I bonds on our joint return. However I fear it is limited to $5K unless we file MFS which would cost us a lot.
Last edited by dickenjb on Wed Jan 23, 2013 9:43 am, edited 1 time in total.
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Re: Paper I-Bonds Purchases With Tax Return

Postby sscritic » Wed Jan 23, 2013 9:38 am

OK, you are under 50 posts so I will try and be gentle.

You couldn't find information on the IRS website about buying I bonds from the IRS because you can't. Yes, you need a refund to buy paper I bonds. While it might be a shame for you, it isn't for those who made an estimated tax payment of $5000 on January 15 (you are 8 days too late).

You can find lots of answers by using the search box for this site.

Publication 17 has your basic tax information:
TreasuryDirect. You can request a deposit of your refund to a TreasuryDirect online account to buy U.S. Treasury marketable securi- ties and savings bonds.
...
If you choose direct deposit, you may be able to split the refund and have it deposited among two or three accounts or buy up to $5,000 in paper series I savings bonds. Complete Form 8888, Allocation of Refund (Including Savings Bond Purchases), and attach it to your return.


Find a copy of Form 8888 on the web or in your tax software and read it and the attached instructions. Maybe you can use it next year. If you are getting a $25 refund this year, you can use it this year without waiting for next.
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Re: Paper I-Bonds Purchases With Tax Return

Postby tfb » Wed Jan 23, 2013 9:40 am

dickenjb wrote:Start planning to be overwithheld for 2013 if you want to do this on next year's return.

sscritic wrote:While it might be a shame for you, it isn't for those who made an estimated tax payment of $5000 on January 15 (you are 8 days too late).

Or still pay more for 2012 tax year with a Form 4868 extension.
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Re: Paper I-Bonds Purchases With Tax Return

Postby crowd79 » Wed Jan 23, 2013 9:45 am

I am not sure I wish to buy extra I-Bonds this year through my tax return. The current rate is only 1.76% and I have a feeling the next semi-annual rate will be far worse than that, perhaps even 0%, as we've had negative inflation for the first 3 out of 6 months. There are some 5 yr CD's out there paying 2% right now, if you're looking to play the yield curve.
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Re: Paper I-Bonds Purchases With Tax Return

Postby sscritic » Wed Jan 23, 2013 9:49 am

tfb wrote:
sscritic wrote:While it might be a shame for you, it isn't for those who made an estimated tax payment of $5000 on January 15 (you are 8 days too late).

Or still pay more for 2012 tax year with a Form 4868 extension.

Thanks for the correction. I have never filed for an extension, so I always forget this method. I think there is still a deadline that must be met. Can you file for an extension in June? :)
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Re: Paper I-Bonds Purchases With Tax Return

Postby assumer » Wed Jan 23, 2013 9:53 am

sscritic wrote:Thanks for the correction. I have never filed for an extension, so I always forget this method. I think there is still a deadline that must be met. Can you file for an extension in June? :)


The deadline for the extension is April 15th. But remember that even if you file an extension and pay your taxes after April 15th and you end up owing, you also owe interest.

I plan on using 4686 to get paper I-Bonds, but I haven't decided on the best way to pay. I signed up for the eftps website, but I don't see the 4686 option on the payments. I might just do it through turbotax in March, or use the e-file website, or last resort snail mail.
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Re: Paper I-Bonds Purchases With Tax Return

Postby sscritic » Wed Jan 23, 2013 9:58 am

assumer wrote:
sscritic wrote:Thanks for the correction. I have never filed for an extension, so I always forget this method. I think there is still a deadline that must be met. Can you file for an extension in June? :)

The deadline for the extension is April 15th.

Have you been assuming again? Assuming that I didn't know the deadline when I put in the smilie? Assuming others wouldn't understand the smilie? Maybe your name fits. :) <-- that's a smilie
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Re: Paper I-Bonds Purchases With Tax Return

Postby Grt2bOutdoors » Wed Jan 23, 2013 10:06 am

sscritic wrote:OK, you are under 50 posts so I will try and be gentle.

You couldn't find information on the IRS website about buying I bonds from the IRS because you can't. Yes, you need a refund to buy paper I bonds. While it might be a shame for you, it isn't for those who made an estimated tax payment of $5000 on January 15 (you are 8 days too late).

You can find lots of answers by using the search box for this site.

Publication 17 has your basic tax information:
TreasuryDirect. You can request a deposit of your refund to a TreasuryDirect online account to buy U.S. Treasury marketable securi- ties and savings bonds.
...
If you choose direct deposit, you may be able to split the refund and have it deposited among two or three accounts or buy up to $5,000 in paper series I savings bonds. Complete Form 8888, Allocation of Refund (Including Savings Bond Purchases), and attach it to your return.


Find a copy of Form 8888 on the web or in your tax software and read it and the attached instructions. Maybe you can use it next year. If you are getting a $25 refund this year, you can use it this year without waiting for next.


I've never known the IRS to refuse a payment. Where does it say that you can not mail a check today for 2012's taxes? I would believe an estimated payment that is required be received by January 15th, not a deliberate overpayment where there is no tax liability has a "due date".
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Re: Paper I-Bonds Purchases With Tax Return

Postby sscritic » Wed Jan 23, 2013 10:07 am

Got me again. Now if I could only stop duplicating my posts.
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Re: Paper I-Bonds Purchases With Tax Return

Postby assumer » Wed Jan 23, 2013 10:07 am

sscritic wrote:
assumer wrote:
sscritic wrote:Thanks for the correction. I have never filed for an extension, so I always forget this method. I think there is still a deadline that must be met. Can you file for an extension in June? :)

The deadline for the extension is April 15th.

Have you been assuming again? Assuming that I didn't know the deadline when I put in the smilie? Assuming others wouldn't understand the smilie? Maybe your name fits. :) <-- that's a smilie


Ha, yes, I am assuming you are a regular US resident taxpayer and not a "fiscal year taxpayer" and that others may wish to know the deadline too :happy

From http://www.irs.gov/pub/irs-pdf/f4868.pdf

File Form 4868 by April 15, 2013. Fiscal year taxpayers, file Form 4868 by the regular due date of the return.
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Re: Paper I-Bonds Purchases With Tax Return

Postby jah » Wed Jan 23, 2013 10:17 am

sscritic wrote:OK, you are under 50 posts so I will try and be gentle.


Thanks for being gentle... :D.

I am simply surprised that the IRS would not allow a tax payer to drop $5,000 extra on their returns for I-bonds. My question came about because I was reading a thread from 2009 in which Mel Lindauer listed his reasons for preferring paper I-bonds over electronic through TD.
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Re: Paper I-Bonds Purchases With Tax Return

Postby assumer » Wed Jan 23, 2013 10:21 am

jah wrote:
sscritic wrote:OK, you are under 50 posts so I will try and be gentle.


Thanks for being gentle... :D.

I am simply surprised that the IRS would not allow a tax payer to drop $5,000 extra on their returns for I-bonds. My question came about because I was reading a thread from 2009 in which Mel Lindauer listed his reasons for preferring paper I-bonds over electronic through TD.


Do you have a link to that article? The only advantage I see is to be able to hit $15,000 in I-Bonds in a given year rather than $10,000. And I fully plan on converting my paper ones to electronic so as not to have a chance of losing them :wink:
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Re: Paper I-Bonds Purchases With Tax Return

Postby jah » Wed Jan 23, 2013 10:29 am

assumer wrote:
jah wrote:
sscritic wrote:OK, you are under 50 posts so I will try and be gentle.


Thanks for being gentle... :D.

I am simply surprised that the IRS would not allow a tax payer to drop $5,000 extra on their returns for I-bonds. My question came about because I was reading a thread from 2009 in which Mel Lindauer listed his reasons for preferring paper I-bonds over electronic through TD.


Do you have a link to that article? The only advantage I see is to be able to hit $15,000 in I-Bonds in a given year rather than $10,000. And I fully plan on converting my paper ones to electronic so as not to have a chance of losing them :wink:


Hope this link to the thread works....

viewtopic.php?t=46154
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Re: Paper I-Bonds Purchases With Tax Return

Postby SSSS » Wed Jan 23, 2013 10:43 am

What I did last year was mailed an extension + $5200 check (I had $200 due) around April 10th. I waited until they had cashed my check (around April 20th) and then filed. I received my bonds with no issue.

I'm going to do the same thing this year, except I'm going to try to get it all done in February or March.
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Re: Paper I-Bonds Purchases With Tax Return

Postby sscritic » Wed Jan 23, 2013 10:45 am

I think that thread is about Mel preferring paper bonds (which he does). I didn't find any post about buying paper bonds from the IRS, but I did see a reference to a refund.
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Re: Paper I-Bonds Purchases With Tax Return

Postby jah » Wed Jan 23, 2013 10:56 am

sscritic wrote:I think that thread is about Mel preferring paper bonds (which he does). I didn't find any post about buying paper bonds from the IRS, but I did see a reference to a refund.


You are correct. But Mel's posts in the thread on why he preferred paper over electronic I-bonds got me thinking. I, too, would rather have paper over electronic. Because I will not have a refund coming to me this year I searched the IRS website to see if there was a way to overpay what I owe on my tax returns in order to purchase paper I-bonds. I could find no such reference on the website. So, thought I would ask in the forum because there are members who are very I-bond aware. Found the answer I was looking for - as you indicated earlier in the thread there is no way. Thanks!
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Re: Paper I-Bonds Purchases With Tax Return

Postby sscritic » Wed Jan 23, 2013 11:01 am

jah wrote:So, thought I would ask in the forum because there are members who are very I-bond aware. Found the answer I was looking for - as you indicated earlier in the thread there is no way. Thanks!

But I was wrong. See all the people who corrected me.

tfb gave the first easy answer. File an extension and make a payment with the extension. Then file for the refund of the money you just sent them (some or all). See SSSS's post for someone who did just that.
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Re: Paper I-Bonds Purchases With Tax Return

Postby DetroitRed » Wed Jan 23, 2013 12:28 pm

Anyone tried filing an early (Jan. or Feb.) extension (Form 4868) along with a payment to "top up" their refund to $5,000? And then the plan would be to wait for the payment to be cashed and immediately file your tax return (i.e. well before April 15th).

I might try that this year, unless someone has had a bad experience and warns me off.
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Re: Paper I-Bonds Purchases With Tax Return

Postby tfb » Wed Jan 23, 2013 12:43 pm

DetroitRed wrote:Anyone tried filing an early (Jan. or Feb.) extension (Form 4868) along with a payment to "top up" their refund to $5,000? And then the plan would be to wait for the payment to be cashed and immediately file your tax return (i.e. well before April 15th).

I did it last year. Filed extension in February, full return in March. Received bonds in April.
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Re: Paper I-Bonds Purchases With Tax Return

Postby dratkinson » Wed Jan 23, 2013 1:45 pm

Mailed extension (form 4868, via certified receipt) in March after completing draft tax return (so I knew exactly how much to write check for). Required ~2 weeks for check to clear.

Filed tax return in April (efiled). Received I bonds ~2 weeks later.
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Re: Paper I-Bonds Purchases With Tax Return

Postby DetroitRed » Wed Jan 23, 2013 8:07 pm

Thanks for the info dratkinson and tfb.
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Re: Paper I-Bonds Purchases With Tax Return

Postby jah » Thu Jan 24, 2013 6:42 am

DetroitRed wrote:Thanks for the info dratkinson and tfb.


I second that thanks, and throw in some thanks to SSSS!
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Re: Paper I-Bonds Purchases With Tax Return

Postby letsgobobby » Thu Mar 28, 2013 9:19 pm

How cumbersome!

Got our $5k I bonds today:

$500x1
$200x1
$1000x4
$50x6

Is this true for everyone else?
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Re: Paper I-Bonds Purchases With Tax Return

Postby sscritic » Thu Mar 28, 2013 9:28 pm

letsgobobby wrote:How cumbersome!

Got our $5k I bonds today:

$500x1
$200x1
$1000x4
$50x6

Is this true for everyone else?

It better be. Those are the rules, but you have them out of order. The correct order is
$50x5
$1000x4
$500x1
$200x1
$50x1
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Re: Paper I-Bonds Purchases With Tax Return

Postby letsgobobby » Thu Mar 28, 2013 9:47 pm

http://www.treasurydirect.gov/indiv/res ... .htm#denom

Ah, right you are. Of course!

sscritic wrote:
letsgobobby wrote:How cumbersome!

Got our $5k I bonds today:

$500x1
$200x1
$1000x4
$50x6

Is this true for everyone else?

It better be. Those are the rules, but you have them out of order. The correct order is
$50x5
$1000x4
$500x1
$200x1
$50x1
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Re: Paper I-Bonds Purchases With Tax Return

Postby hansp » Fri Mar 29, 2013 12:09 am

The past 2 years i've filed my extension payment via eftps (eftps.com). No separate extension form needed and the payment is taken out of my checking account in a day or 2. Wait another day or so and then file. Super easy (although eftps is a bit of a pain intially to set up an account)
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Re: Paper I-Bonds Purchases With Tax Return

Postby assumer » Fri Mar 29, 2013 9:21 am

hansp wrote:The past 2 years i've filed my extension payment via eftps (eftps.com). No separate extension form needed and the payment is taken out of my checking account in a day or 2. Wait another day or so and then file. Super easy (although eftps is a bit of a pain intially to set up an account)


Even though I didn't use it for my final tax preparation you can use tax act for free to also submit your extension payment electronically.
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Re: Paper I-Bonds Purchases With Tax Return

Postby dratkinson » Fri Apr 19, 2013 9:42 am

A data point.

Since we've been playing this game of trying to get I bonds with our tax returns, I've had a questions: Will our I bond issue date be the same as the month our taxes are "accepted" by the IRS?

The short answer is: No.

The long answer. My taxes were efiled and "accepted" on 29 Mar (Friday afternoon), my I bonds came yesterday 18 Apr and were dated "Apr 2013". (30-31 Mar were a weekend, if that matters.)

Allowing for delays, the time lag between the IRS accepting our return and getting the information to Treasury to issue our bonds can result in a later (month) issue date. So three days lead time---the 29th, plus a weekend (30-31)---were not enough time to get a Mar 2013 issue date, in my case.



Bottom line. I'm happy to have won half this round---$5K I bonds with an Apr issue date, instead of the desired Mar issue date.
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Re: Paper I-Bonds Purchases With Tax Return

Postby hansp » Fri Apr 19, 2013 10:01 am

It looks like the date on the I-bonds is determined by when the refund in sent out.

My dates:

Tax return accepted: March 20.

Direct Deposit refund received in bank account: April 3 (2 weeks later)
I bonds received: April 12, dated April 2013


Just went back and checked last years dates:

Return Accepted: 2/17
Ibonds issued: March 2012
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