Search found 526 matches

by MisterMister
Sun Mar 17, 2024 11:57 am
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bon

The TT on line SW should highlight that figure is on the 1099 INT so customers are sure to consider if that unusual circumstance applies (prob not that unusual) In general, BHs have "unusual circumstances" as identified by Turbotax. It is always wise to drill down the "this is not common" trees on TT because many situations are common for this audience. I don't even typically buy treasuries on the secondary market, yet I have run into this when buying a re-opening (I think). Agree with the thanks for this thread: it opened up my eyes. Good point on taking a harder look at unusual circumstances. It would take a TT programmer a few minutes to add the prompt … i see you have $666 on your 1099 INT under accrued interest pai...
by MisterMister
Sun Mar 10, 2024 6:25 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: How to report gain/loss and interest for Tbills sold before maturity

Thank you Kevin M. Unfortunately, my case is different from your case because all the gain from selling T-bill before maturity appears in 1099-INT. None appears in 1099-B. Instead of being able to enter the correct interest amount in 1099-INT interview, we will have to enter the wrong amount and make an adjustment to it. What broker is this? I would like to see the entire composite 1099 to see if there is something you might be missing. Assuming you are telling the whole truth and nothing but the truth, I would just leave it as is, and report the interest on 1099-INT. Your broker made it simple for you, so why complicate things? The IRS will get the 1099-INT, and it will match what you report on your return, so the IRS will be happy. Any d...
by MisterMister
Sun Mar 10, 2024 2:54 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Report Gain from Selling T-Bill as Interest Income?

Thank you for your explanation. my case is the last case. do i need to add adjustment on Schedule B instead of directly entering the correct interest income? im not sure if tax software allows me to make adjustments on Schedule B. I would add a row to line 1 of Schedule B with an explicit adjustment. However, I do not use an income tax return preparation program. Double check whether the tax software allows Accrued Interest to be entered. Any income tax return preparation program that supports Schedule B should allow the standard adjustments to interest to be entered. At some point in processing an income tax return, the IRS likely checks whether the total interest amount reported on Schedule B without explicit adjustments is consistent wi...
by MisterMister
Sat Mar 02, 2024 4:35 am
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bonds

Kevin wrote “Bills are not considered market discount bonds, but are in a category of their own: short term US government obligations. The accrued acquisition discount is treated as interest,” 1. I bought a treasury NOTE at discount on 2ndary market. It matured in the same year that I bought. Is this type of treasury note considered “short term US government obligations “? If not, can I treat the market discount as short-term capital gain? 2. In 2023 Fidelity 1099-B, is the market discount already included in the cost basis? Thanks very much for your help. See Kevin's very first post for more detailed explanations. But for your specific case the answer to all your questions is no. The accrued market discount (box 1f) still has to be treate...
by MisterMister
Thu Feb 29, 2024 4:55 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bonds

Does know the formula used to compute accrued market discount for notes/bonds? Specifically, trying to match the accrued market discount computed by Fidelity's 1099 vs my calculation on spreadsheet. My spreadsheet computes a daily interest between purchase date and maturity and then computes accrued market discount for number of days held. If I hold to maturity, the formula works as it computes exactly the difference between par value and my cost basis. But for notes that I sell early, the amount I calculate is off by a few dollars from the accrued market discount on Fidelity's 1099. Adjusting the number of days +/1 doesn't seem to lead to a match with Fidelity's formula. It is not critical for my tax return as I will just report whatever ...
by MisterMister
Tue Feb 27, 2024 1:17 pm
Forum: Personal Finance (Not Investing)
Topic: 1099-NEC payment timing issue
Replies: 15
Views: 878

Re: 1099-NEC payment timing issue

terran wrote: Tue Feb 27, 2024 12:50 pm In the past I've reported this under Other Expenses on my Schedule C as "Amount not constructively received in <Year>" and then added the income the following year. Didn't cause a problem.
That’s interesting. I’ll have look into that.
by MisterMister
Tue Feb 27, 2024 12:45 pm
Forum: Personal Finance (Not Investing)
Topic: 1099-NEC payment timing issue
Replies: 15
Views: 878

Re: 1099-NEC payment timing issue

We run payroll December 31st each year. For employees that don’t have direct deposit, we mail the payroll checks to them and they don’t receive the funds in hand until mid January. For labor law and tax reporting purposes, the funds are constructively received the moment the check runs through the printer. Theoretically the employee could have been standing there at the office to pick it up. It’s the same for tax withholding, garnishments, and 401(k), 403(b) contributions- it follows the check date. The Dec 31 payroll contributions get sent to the brokerages in January (new tax year), but for tax and W2 purposes it counts for the previous tax year because that’s when it “happened”. If the IRS went by when you got the check in the mail, the...
by MisterMister
Tue Feb 27, 2024 12:03 pm
Forum: Personal Finance (Not Investing)
Topic: 1099-NEC payment timing issue
Replies: 15
Views: 878

Re: 1099-NEC payment timing issue

On reflection I've decided it is less aggravation to simply declare the extra income in 2023 so there is no income discrepancy. The alternative of having to file paper returns with income explanations for both 2023 and 2024 is just too onerous. It's baffling to me that there's a 50 page publication on taxes for Schedule C (pub 334) that even includes this exact example: Example. On December 30, 2022, a client sent you a check for interior decorating services you provided to them. You received the check on January 4, 2023. You must include the amount of the check in income for 2023. Yet nowhere in the publication does it tell you how to report it, nor does Schedule C include a line for separating this out. OK. You are right. This is very an...
by MisterMister
Tue Feb 27, 2024 11:39 am
Forum: Personal Finance (Not Investing)
Topic: 1099-NEC payment timing issue
Replies: 15
Views: 878

Re: 1099-NEC payment timing issue

On reflection I've decided it is less aggravation to simply declare the extra income in 2023 so there is no income discrepancy. The alternative of having to file paper returns with income explanations for both 2023 and 2024 is just too onerous.
by MisterMister
Tue Feb 27, 2024 9:23 am
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bonds

Yes, the interest in 1099-INT is exactly difference between sales proceeds and cost. Since ultimately it does not affect total tax, I was thinking to just proceed as reported by Fidelity. It's interesting to see major brokerages handling this situation differently. For my own returns, on 2022 the t-bill sold early was on 8949 (schwab) and for 2023 it'll be entirely in 1099-INT (fidelity). A lesson for 2024 and beyond is to plan to not sell T-bills early unless absolutely necessary. That prompts a general question (not specific to different income tax preparation programs). Should an income tax return include Form 8949 for the maturity or sale of a T-Bill when a Form 1099-B has not been issued and there is no capital gain or loss (the diffe...
by MisterMister
Mon Feb 26, 2024 8:29 pm
Forum: Personal Finance (Not Investing)
Topic: 1099-NEC payment timing issue
Replies: 15
Views: 878

Re: 1099-NEC payment timing issue

Facing a simple tax issue but hoping to find the simplest fix. I do a little consulting in retirement, and as usual received a 1099-NEC for 2023. As I suspected, the 1099-NEC was "wrong" from my perspective. My client cut and mailed a small check a few days before the end of 2023 and I did not receive it until January 2024. Since I am on cash basis, my gross SE income for 2023 will be about $500 less than the 1099-NEC reports. I'd like to avoid a notice of correction of inquiry from the IRS. I'd further like to avoid having to file a paper return, if possible. What are the best options? I've considered just paying the tax on the 1099-NEC as reported, but that's obviously not correct for a cash basis. And asking the client for a &...
by MisterMister
Mon Feb 26, 2024 8:24 pm
Forum: Personal Finance (Not Investing)
Topic: 1099-NEC payment timing issue
Replies: 15
Views: 878

Re: 1099-NEC payment timing issue

indexfund56 wrote: Mon Feb 26, 2024 8:21 pm I’ve had similar situations in the past. If the check was dated and/or mailed by the end of the year, the client considers it paid last year. What’s the problem just realizing the income in 2023, particularly if it’s only $500? That’s what I would advise doing.
Yes, this is the way I am leaning at the moment. Thanks.
by MisterMister
Mon Feb 26, 2024 8:08 pm
Forum: Personal Finance (Not Investing)
Topic: 1099-NEC payment timing issue
Replies: 15
Views: 878

1099-NEC payment timing issue

Facing a simple tax issue but hoping to find the simplest fix. I do a little consulting in retirement, and as usual received a 1099-NEC for 2023. As I suspected, the 1099-NEC was "wrong" from my perspective. My client cut and mailed a small check a few days before the end of 2023 and I did not receive it until January 2024. Since I am on cash basis, my gross SE income for 2023 will be about $500 less than the 1099-NEC reports. I'd like to avoid a notice of correction of inquiry from the IRS. I'd further like to avoid having to file a paper return, if possible. What are the best options? I've considered just paying the tax on the 1099-NEC as reported, but that's obviously not correct for a cash basis. And asking the client for a &q...
by MisterMister
Mon Feb 26, 2024 4:59 pm
Forum: Personal Finance (Not Investing)
Topic: How is income from U.S. obligations handled by state tax software?
Replies: 42
Views: 4443

Re: How is income from U.S. obligations handled by state tax software?

Fast forwarding to 2023 tax preparation: This is the first year I'm using H&R Block software for my state tax return (PA has their own tax return which I had been using). I was a bit perplexed on how to report the government obligation deductions for my state on the H&R return. Luckily, I did a computer search and discovered 'The Finance Buff's explanation. 2023 State Tax-Exempt Treasury Interest from Funds and ETFs At the above link toggle down to the 'Table of Contents' and select H&R Block (Turbo Tax or 'Free Tax USA' options) for a detail explanation. When you check the box at the bottom of your 'Dividend and Distribution' page of your tax software page (titled 'From U.S. Treasury obligations') you will see: Enter your U.S....
by MisterMister
Mon Feb 26, 2024 7:57 am
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bonds

The fourth choice, correctly mixing gains and interest as the statutes require, has not been documented here to my knowledge as something brokers do. It's not up to the broker to do it, it's up to you. Moving part of the interest over to STCG is awkward since it requires either a replacement or an adjustment to Fidelity's 1099-INT. The former would cause Fidelity's IRS-reported interest sum to differ from my revised value and the latter requires an adjustment line item. I suppose either of those might be red-flagged by the IRS were the amounts not so tiny. It's common to need to make adjustments to interest, so there should be no issue with the Schedule B having different amounts than the 1099-INT. Two other examples are making an adjustme...
by MisterMister
Mon Feb 26, 2024 7:48 am
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bonds

2. Broker reports net proceeds as all cap gain (Schwab) Not on their 1099's. It's all reported in "YEAR-END SUMMARY INFORMATION THAT IS NOT REPORTED TO THE IRS" The amount is included in Box3. My experience with Schwab 1099s for treasury securities sold before maturity is consistent over years: For t-bills, the proceeds and cost are NOT reported on 1099-B; the info is in the summary information pages that trail the 1099s. The division between interest income and STCG (if any), as well as promotion in the direction of schedules B and D, is up to me. I report the division via form 8949 part 1 with box C marked; the total of adjustments for such pre-maturity sales goes into a line in part 1 of Schedule B that I describe as "acc...
by MisterMister
Sat Feb 24, 2024 1:00 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bonds

In July 2022 I bought a Treasury Bill on the secondary market through Ally Brokerage, selling in April 2023 (two months prior to maturity) for a $409 gain. I contacted Ally asking when I should expect to receive a 1099 and received the following response. "Thank you for your inquiry. We've been informed by our clearing firm that sales of T Bills are not required by the IRS to be reported on the 1099. This is why you did not received a 1099 for your account for tax year 2023." Can I simply create a 1099-INT in FreeTaxUSA as if I received one from Ally, reporting the $409 in Box 3? Will not having a 1099 cause any issues? I checked my 2019 1099 from Scwhab; I sold some bills before maturity that year. The only place numbers for tho...
by MisterMister
Sat Feb 24, 2024 12:37 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bonds

I'm thinking I might get hit with some penalties because I wasn't tracking the interest on bonds and it looks like I made over $22,000 in treasuries interest. A lot of it was on money I was holding for a house purchase. I'll have to pay more attention in 2024 but won't have that huge chunk in a taxable account like I did in 2023. By penalties, I take it that you didn't have enough withholding or estimate tax payments under the "safe harbor" rules? If so, interest rates in 2023 were a lot higher than previous years so I suspect that many people are finding themselves in your position. Take a look at safe harbor rules and see if that doesn't help for 2024. Limited understanding of safe harbor rules but I thought that required you t...
by MisterMister
Fri Feb 23, 2024 10:23 am
Forum: Investing - Theory, News & General
Topic: Question about treasury bond capital gains
Replies: 4
Views: 763

Re: Question about treasury bond capital gains

Old thread, but some inaccurate information was provided here.

Treasury bonds bought on the secondary market at less than par have market discount and normally not OID. And the discount is generally not accreted annually, rather the tax is paid on the discount at maturity (unless sold early). If held to maturity there are no capital gains.

All this and much more is discussed in the huge thread here: viewtopic.php?t=390405, where the first post is particularly helpful.
by MisterMister
Mon Feb 12, 2024 9:45 pm
Forum: Personal Finance (Not Investing)
Topic: Fidelity showing T-Bills as Capital Gains
Replies: 45
Views: 7261

Re: Fidelity showing T-Bills as Capital Gains

^ In my case (Fidelity's 1099), the 1099-B had NO entries for the non-covered transactions (T-bills). I understand and agree with your math but I loathe augmenting or making adjustments to downloaded 1099's unless absolutely necessary. With no available guidance from my state on this scenario and no impact to my federal liability either way, I won't do it. It seems Vanguard/Schwab customers may have a more difficult decision.
by MisterMister
Mon Feb 12, 2024 9:31 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bonds

. . When I played State Tax part, there is a radio 'Interest/Divdend adjustment' under heading 'Investment'. But none seem fitting what I needed to do. After hitting 'continue' there is a catch-all screen 'other adjustment' where we can make 'subtraction' or 'addition' to Interest. I entered AMD there and bingo, my state tax reduced respectively. Not sure if this is the proper way but it's one way to get the tax amount right. . . One thing you might want to do is look at the state return and see where/how the interest is excluded. For example, in Illinois, the deduction must be on line 22 of Schedule M; a partial snapshot is shown below. Note that IL-1040 line 1 mentioned in the clip refers to adjusted gross income from your federal return...
by MisterMister
Mon Feb 12, 2024 3:27 pm
Forum: Personal Finance (Not Investing)
Topic: Fidelity showing T-Bills as Capital Gains
Replies: 45
Views: 7261

Re: Fidelity showing T-Bills as Capital Gains

I received a 1099-B from Fidelity for 2023. ALL of my T-Bill gains (whether the bond was held to maturity or not) were reported as interest. I also had a T-Bill transaction which resulted in a loss and that one was not reported at all. The "Taxation of Treasury bills, notes and bonds" super-thread had a discussion which (I think decisively) concluded that disposing of T-Bills before maturity might result in a mix of cap gains and interest, and also demonstrated how to calculate the mix. Be that as it may, Fidelity appears to not be using that method for reporting with T-Bills, opting instead for reporting everything as interest. T-Bills are not covered by IRS regulations that require brokerages to report the basis of sales. I don...
by MisterMister
Mon Feb 12, 2024 3:22 pm
Forum: Personal Finance (Not Investing)
Topic: Fidelity showing T-Bills as Capital Gains
Replies: 45
Views: 7261

Re: Fidelity showing T-Bills as Capital Gains

It's going to be advantageous for most investors to use capital gains over interest when there's an opportunity to it . However, the amount will usually be pretty small for most. The time that it comes up is when you sell your T bills on the secondary market for more than the prorated daily rate which has accumulated and it's possible that you'll have to "correct" the 1099 on your tax form. Hmm. For T-Bills, as gains are short-term I presume it does not matter in most cases since they are taxed at the same rate as interest income. In fact some might argue the reverse is true since the cap gains can be taxable at the state level (as I recall there's been debate here on that also). This thread https://money.stackexchange.com/questi...
by MisterMister
Mon Feb 12, 2024 12:06 pm
Forum: Personal Finance (Not Investing)
Topic: Fidelity showing T-Bills as Capital Gains
Replies: 45
Views: 7261

Re: Fidelity showing T-Bills as Capital Gains

^ It can get a little bit more challenging when you're selling before maturity date, and notes are handled a little differently than bills. But if you're holding until maturity, then it's pretty straightforward and the 1099s should be easy to figure out. I received a 1099-B from Fidelity for 2023. ALL of my T-Bill gains (whether the bond was held to maturity or not) were reported as interest. I also had a T-Bill transaction which resulted in a loss and that one was not reported at all. The "Taxation of Treasury bills, notes and bonds" super-thread had a discussion which (I think decisively) concluded that disposing of T-Bills before maturity might result in a mix of cap gains and interest, and also demonstrated how to calculate t...
by MisterMister
Sun Feb 04, 2024 5:12 pm
Forum: Personal Finance (Not Investing)
Topic: How is income from U.S. obligations handled by state tax software?
Replies: 42
Views: 4443

Re: How is income from U.S. obligations handled by state tax software?

Fast forwarding to 2023 tax preparation: This is the first year I'm using H&R Block software for my state tax return (PA has their own tax return which I had been using). I was a bit perplexed on how to report the government obligation deductions for my state on the H&R return. Luckily, I did a computer search and discovered 'The Finance Buff's explanation. 2023 State Tax-Exempt Treasury Interest from Funds and ETFs At the above link toggle down to the 'Table of Contents' and select H&R Block (Turbo Tax or 'Free Tax USA' options) for a detail explanation. When you check the box at the bottom of your 'Dividend and Distribution' page of your tax software page (titled 'From U.S. Treasury obligations') you will see: Enter your U.S....
by MisterMister
Thu Nov 02, 2023 10:49 pm
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203011

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Has anyone done the math on redeeming 0% fixed iBonds from Late 2021 in order to repurchase at the 1.3% fixed rate? I know I'd have to pay taxes on the bond's gains and lose the deferred interest + 3 month penalty but trying to compare that with a gain of 1.3%. A 10k Dec '21 I-bond is worth 11,364 but after the 3 month penalty is 11,240. https://eyebonds.info/ibonds/10000/ib_2021_12.html Take the penalty of 124 and your federal taxes on the 1240 you get paid. 124+taxrate*1240=10000*(1.013)^n - 10000 (waiting n years to break even) You break even after paying taxes 10% fed tax rate 2 years (n=2) 20% fed tax rate 3 years (n=3) 30% fed tax rate 4 years (n=4) 40% fed tax rate 5 years (n=5) This includes paying the taxes on your current gains s...
by MisterMister
Wed Nov 01, 2023 11:34 am
Forum: Personal Investments
Topic: Redeem Treasury Direct Bond for new fixed rate?
Replies: 14
Views: 1994

Re: Redeem Treasury Direct Bond for new fixed rate?

^ How about only redeeming $10k of the existing I Bond, and leaving the remaining $1,304 (thereby avoiding the 3 month penalty on that portion). Yeah, that would help, or since the amount is small you could just re-invest the excess elsewhere like T-Bills. It would be an interesting exercise to see how your suggestion effects the payback time. I am not handy enough with math to figure that out, but that is what we are considering doing with our May 2021 I Bonds. Redeem $10k each (leave $1k+ each), and do gift box purchases (since we already maxed out purchases for 2023). I think to net a withdrawal of 10K in my example the full amount of 11396 would be reduced by about 10081, leaving 1315 still invested at the new 3.94% rate for the older ...
by MisterMister
Wed Nov 01, 2023 11:06 am
Forum: Personal Investments
Topic: Redeem Treasury Direct Bond for new fixed rate?
Replies: 14
Views: 1994

Re: Redeem Treasury Direct Bond for new fixed rate?

^
anon_investor wrote: Wed Nov 01, 2023 10:55 am How about only redeeming $10k of the existing I Bond, and leaving the remaining $1,304 (thereby avoiding the 3 month penalty on that portion).
Yeah, that would help, or since the amount is small you could just re-invest the excess elsewhere like T-Bills. It would be an interesting exercise to see how your suggestion effects the payback time.
by MisterMister
Wed Nov 01, 2023 10:44 am
Forum: Personal Investments
Topic: Redeem Treasury Direct Bond for new fixed rate?
Replies: 14
Views: 1994

Re: Redeem Treasury Direct Bond for new fixed rate?

I have two different treasury direct I bond's one from 2021 and one from 2022. My current interest rate is only 3.38% because the fixed amount is 0. If I redeem I lose 3 months of interest but I gained the 1.3% interest fixed rate for the duration of the new bond and effective 11/1 the total interest rate will be 5.27% Is there an easy way to calculate this or a spreadsheet formula? I have to admit it's been years since I've done financial calculations but it seems like I would break even fairly quickly. Thanks To make things simple I've used my own November 2021 purchase. The payback is about 8 months ignoring tax implications. Also since this is just a WAG estimate I've also assumed the following, which are not true: 1. You will continue...
by MisterMister
Fri Jun 02, 2023 8:17 am
Forum: Investing - Theory, News & General
Topic: Trading Treasuries (nominal and TIPS)
Replies: 4107
Views: 455531

Re: Trading Treasuries (nominal and TIPS)

Is there a way to calculate a yield on an individual bond portfolio that is comparable to a ETF or is that just an unnecessary exercise? I'm in the midst of trying to determine if I want to switch to a ETF like XHLF or XONE in place of my manual ladder. Was just playing around looking at mine to see if I could determine it out of curiosity. Sure. You could calculate the weighted average yield of your bond portfolio. One way to do it is to have columns for value and yield for each bond holding. Calculate the total value in one cell somewhere (e.g, at bottom or top of column with values). Add a column for the percent of total value for each holding: value / total value. Add a column that has the product of the yield and the weight (% total v...
by MisterMister
Thu Jun 01, 2023 3:20 pm
Forum: Investing - Theory, News & General
Topic: Trading Treasuries (nominal and TIPS)
Replies: 4107
Views: 455531

Re: Trading Treasuries (nominal and TIPS)

No 13-wk or 26-wk t-bills were offered at auction today. Instead, only a 1(!)-day CMB and announcement of tentative plans for 13- and 26- week auctions next week.

https://www.treasurydirect.gov/auctions/
by MisterMister
Tue May 30, 2023 7:53 pm
Forum: Investing - Theory, News & General
Topic: Trading Treasuries (nominal and TIPS)
Replies: 4107
Views: 455531

Re: Trading Treasuries (nominal and TIPS)

protagonist wrote: Tue May 30, 2023 2:56 pm .
.
.
That is disheartening that your funds are still in the bank from 5/24. My credit union told me it takes "48 to 72 hours" to go through and for the funds to be at Fidelity. I'm doubting that. My maturity date was 5/29 (holiday)....I doubt if I will see my money in Fidelity before an agreement is sealed.
For bank fund transfers where the source funds are immediately available, people can consider pulling from Fidelity rather than pushing to Fidelity. I've found the money is available for investment within a few hours (even though the actual funds are not there yet). I don't know of anything special about my account that makes that possible, though I do have a margin account.
by MisterMister
Mon May 29, 2023 9:44 pm
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203011

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Quick question: If I want to redeem my I bonds after my 21 months since the effective purchase date expire (18 months favorable interest rates [> T-bill rates] + 3 months to avoid the penalty), then I schedule the redemption for the 1st of the following month, correct? Interest accrues on the last day of the month, and should show in the Treasury Direct account and be available to be withdrawn on the 1st? So for example if I bought on 12/31/2021, then I would schedule the redemption for exactly Friday 09/01/2023, right? And the money including all interest for 18 months will be in my checking account on ...? Yes, the 3.68% lower composite rate on that purchase kicks in in June, so yes you would redeem on 9/1 to surrender the first three mo...
by MisterMister
Fri May 26, 2023 3:26 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bonds

I'm considering purchasing some TIPS in taxable and want to make sure I understand. They would be purchased at Vanguard and I use TurboTax. If I'm reading correctly, Vanguard's 1099 (actual or important) does most the work, but you have to track and adjust for accrued interest. Cash income, inflation adjustment and any OID are taxable at ordinary rates for federal tax and are exempt from state taxation. Pretty much correct. The inflation adjustment is reported as OID, so these are one and the same. The only accrued interest to deal with is what you pay when you buy, and you just deal with that either in the tax year you buy (which I do if possible), or in the tax year you receive your first coupon payment. Thank you. #cruncher, you and oth...
by MisterMister
Sat May 20, 2023 10:01 am
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bonds

Holy cow, this thread has made my head spin. Like many, I have purchased treasuries for the first time in 2023 (Calif). I have only purchased zero coupon tbills on the secondary market. All of them so far have been issued within 2023 with maturity dates in 2023. All were purchased at a "discount" (not sure if this is the right terminology) with the par value credited to me at maturity. I am intending on holding all the bills to maturity. I did buy CUSIP 912796W47 (UNITED STATES TREAS BILLS ZERO CPN) with an issuance date of 5/19/22 and a maturity of 5/18/23. I purchased this one probably sometime in February 2023. I have read through the thread that tax handling seems to be simpler if the maturity of the tbill is less than a year...
by MisterMister
Wed May 17, 2023 8:50 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bonds

Simplified example. Say you buy a 10-year bond at 90, which is a market discount of 10. Unless you elect to include accrued market discount in current income, about 1 of that discount will be accrued after one year. If you sell the bond after one year at 92, you have accrued discount of 1 and capital gain of 1. If you sell it at 90 you have accrued discount of 1 and capital loss of 1. Wasn't this just discussed?? Looks like it starts around here https://www.bogleheads.org/forum/viewtopic.php?p=7179076#p7179076 . . . I think the discussion you reference was about T-bills specifically, which are handled differently than notes. I think that tbills and tnotes are probably handled the same. However, one uses the term "accrued market discou...
by MisterMister
Wed May 17, 2023 5:26 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bonds

^ I think these last few posts definitely settle how to handle t-bill gains/losses. The related debate has been going on here for some time and it's been an annoying set of ambiguities. But I think the actual tax code referenced by FactualFran leaves no doubt; too bad pub 550 isn't as clear.
by MisterMister
Thu May 11, 2023 5:40 pm
Forum: Investing - Theory, News & General
Topic: Trading Treasuries (nominal and TIPS)
Replies: 4107
Views: 455531

Re: Trading Treasuries (nominal and TIPS)

Also posted on another thread The four week treasury bill rate for today’s May 11, 2023 auction was 5.723% https://www.treasurydirect.gov/auctions/announcements-data-results/ I bought some of the 4-week treasuries maturing 6/13/23 but I calculated my rate to be closer to 5.2~%. Does anyone know why this is different than the 5.723% quoted above? I bought some as well. The yield calculation is ((100 / 99.564056) - 1)*366/28 = .05723 Sorry for my ignorance, as I’m not very good at math. What do the 366 and 28 numbers mean in your formula. For my particular situation, I purchased $155,000 in face value for The 6/13 four-week treasury. I paid $154,324.29… how does one get from that number to the correct 5.723% rate? The amount you purchased do...
by MisterMister
Thu May 11, 2023 5:13 pm
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203011

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

If I were to only pull my original $10K out of my 2021 ibond purchase and leave all the interest earned in that lot to purchase some of these newer .9% fixed rate ibonds, how much would I expect to pay in taxes on my May 2021 ibonds if I cash them out in say in October if in the 24% bracket? Total value should be around $11,532 in september. I would forgo the previous 3 months of interest earned for cashing out I realize losing roughly $100 in interest so call its roughly $1400 left in the original Ibond lot after I pull $10K from it. The best time to do this is August 1 for reasons already discussed. To put a fine point on it, and assuming you redeemed in August, you'd have the following numbers: Your redemption value at that time would b...
by MisterMister
Thu May 11, 2023 4:19 pm
Forum: Investing - Theory, News & General
Topic: Trading Treasuries (nominal and TIPS)
Replies: 4107
Views: 455531

Re: Trading Treasuries (nominal and TIPS)

Bulgogi Head wrote: Thu May 11, 2023 4:13 pm
dual wrote: Thu May 11, 2023 1:10 pm Also posted on another thread

The four week treasury bill rate for today’s May 11, 2023 auction was 5.723%

https://www.treasurydirect.gov/auctions ... a-results/
I bought some of the 4-week treasuries maturing 6/13/23 but I calculated my rate to be closer to 5.2~%. Does anyone know why this is different than the 5.723% quoted above?
I bought some as well. The yield calculation is ((100 / 99.564056) - 1)*366/28 = .05723
by MisterMister
Tue May 09, 2023 8:27 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203011

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

^A reason for not cutting things too close, for sure. But I no longer worry about such delays since the bulk of my cash is now at Fidelity, either in money markets or Treasuries.

If I need to get cash out to a bank, Fidelity offers free outbound wires and most banks also don't charge for incoming wire funds. For the banks I've used, the funds have generally become available within a few hours. And there hasn't been a hold on the money either. Of the three banks I've checked that I deal with, two have same-day availability for incoming wires and the third has next business day avaialability.
by MisterMister
Mon May 08, 2023 9:10 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203011

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Did anyone else get a two factor one time password (OTP) from Treasury Direct today? I logged into my accounts a few days ago (Thurs I think) and got them at the time, but I just got pinged again today (Sunday) when I have not accessed my accounts since Thursday. Curious if maybe this is happening to others due to the change away from virtual keyboard? If not, guessing perhaps someone is trying to hack into my accounts. Would be great to hear if anyone else experienced. Yep, wifey got the same (OTP) email. Sounds like this happened to a few of us. Slightly concerning if you ask me. The Web sites specifically states in bold red, words to the following effect: 1) you will need to confirm the OTP each time you log in, and 2) you will no longe...
by MisterMister
Fri May 05, 2023 11:10 pm
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203011

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

I filled out my tax return to receive 5k in I bonds. Unfortunately I didn't double check that TT had filled in form 8888 completely and I now note that line 4 "Amount to be used for bond purchases for yourself (and your spouse if filing jointly) $5000.00 5a "Amount to be used to buy bonds for yourself, your spouse, or someone else.... is blank 5b "Enter the owner's name (First then Last) for the bond registration" is also blank. Is there a way to easily correct this? I still would prefer the bonds but I imagine they will just refund the entire amount to my checking account? Thanks doneat If the bond is for you and your spouse and you file jointly then the form is correct as-is. That's exactly the way the HRBlock softwar...
by MisterMister
Tue May 02, 2023 1:17 pm
Forum: Investing - Theory, News & General
Topic: Trading Treasuries (nominal and TIPS)
Replies: 4107
Views: 455531

Re: Trading Treasuries (nominal and TIPS)

Can anyone shed some light on why the 5 yr TIPS CUSIP 9128286N5, 4/15/24 YTM continues to increase? I purchased this bond in early Feb of this yr with a YTM of 2.411. The yield on the secondary mkt today is 2.691. Seems even more favorable, though inflation factor is decreasing. Thanks. I just wanted to make a couple of points in addition to Kevin's answer. First, the inflation factor (or index ratio) is not decreasing relative to your February purchase. The Inflation factors in February were decreasing because they are based on Nov-Dec CPI figures. So, the inflation factors are based on CPI figures that are a few months old. When you bought the bond the inflation factor was between 1.18042 and 1.17692. They went down all the month of Febr...
by MisterMister
Mon May 01, 2023 1:48 pm
Forum: Investing - Theory, News & General
Topic: Taxation of Treasury bills, notes and bonds
Replies: 1028
Views: 149471

Re: Taxation of Treasury bills, notes and bonds

erp wrote: Sun Apr 30, 2023 11:17 pm
Kevin M wrote: Sun Apr 30, 2023 2:08 pm Simplified example. Say you buy a 10-year bond at 90, which is a market discount of 10. Unless you elect to include accrued market discount in current income, about 1 of that discount will be accrued after one year. If you sell the bond after one year at 92, you have accrued discount of 1 and capital gain of 1. If you sell it at 90 you have accrued discount of 1 and capital loss of 1.
Wasn't this just discussed?? Looks like it starts around here viewtopic.php?p=7179076#p7179076
.
.
.
I think the discussion you reference was about T-bills specifically, which are handled differently than notes.
by MisterMister
Mon May 01, 2023 10:10 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203011

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

Beachey wrote: Mon May 01, 2023 10:04 am
MisterMister wrote: Mon May 01, 2023 9:52 am The problem may be that the gift designation must be made when the bond is initially purchased. So I don't see any method to "re-gift" an existing I-bond. Many someone else has found such a work flow and I'd welcome information on that process.
Not looking to re-gift, this would be technically a new purchase using funds from a sold I-bond.
OK, of course the limit will also come into play then, assuming the value is above 10K. I don't have experience with minor child accounts; obviously you'd be in a much simpler scenario if you could handle the entire set of transactions between yourself and your spouse. Maybe others have tips they can provide.
by MisterMister
Mon May 01, 2023 9:52 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203011

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

I too am looking at whether it makes sense to sell and rebuy to lock in the 0.9% fixed rate. My conclusion right now is it appears that it mostly does for anything I plan on holding long-term. However, the bonds I would be looking to convert would exceed $10,000. In my I-bond account, I have accounts for myself and my minor children. One small problem is I need to reset my wife's password and have not had any luck yet with getting through to reset it and so can not access her account at this time. (with the additional complication I can only call when she is available to authorize my speaking with them about her account). So my question is can I buy gift bonds in my minor children's account to gift to me in subsequent years to keep under t...
by MisterMister
Sun Apr 30, 2023 3:16 pm
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203011

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

^Good points. Of course you can use gifting strategy to buy more than 10K, which is the way I've bought most of my recent bonds. In any case it was meant to be a mathematical illustration rather than a precise plan of attack. I have revised my illustrative figures so they are below the 10K limit.
by MisterMister
Sun Apr 30, 2023 11:34 am
Forum: Investing - Theory, News & General
Topic: I Bonds Mega Thread (I Bond Heads Rejoice!)
Replies: 6651
Views: 1203011

Re: I Bonds Mega Thread (I Bond Heads Rejoice!)

What is the math for determining whether it makes sense to cash in a 0% fixed-rate I Bond that's still within the 5-year penalty period and reinvest the proceeds in a new 0.9% fixed-rate I Bond? I am in a similar situation. I have a May 2021 bond (0% fixed rate) I am thinking of redeeming to invest at the new .9% fixed rate. I wanted to know the break-even period to recover the 3 months lost interest. This May 2021 bond transitions to its new 3.38% composite in May 23. A replacement bond would start with a composite rate of 4.30%. To do the math you need to make an assumption about the future inflation rate. I chose to assume it would be unchanged until the breakeven point, so the composite rate on the new I-bond purchase would remain 4.30...
by MisterMister
Sun Apr 30, 2023 11:33 am
Forum: Personal Investments
Topic: Help me figure out my I-Bond interest.
Replies: 16
Views: 2149

Re: Help me figure out my I-Bond interest.

heikejohn1 wrote: Sun Apr 30, 2023 11:29 am How is the interest calculated. I have not been able to find the answer to that.
Is it recalculated on the accrued value every month?
Where can I find an explanation?
Explained in the wiki here:

https://www.bogleheads.org/wiki/I_savings_bonds