Gifting I-Bonds - who is liable for tax on accumulated interest?

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CULater
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Gifting I-Bonds - who is liable for tax on accumulated interest?

Post by CULater » Fri Mar 23, 2018 5:01 pm

I wish to gift some I-Bonds to my mother that she can liquidate for her living expenses. These I-Bonds all have accumulated interest and tax will be due on the interest when they are liquidated. Who is liable for the tax, the gifter (me) or the recipient (mother)? It would be desirable for my mother to have to pay tax on the interest, as her income is much lower and she can claim medical deductions.

I should add that the I-Bonds are in a Treasury Direct account under my name and my mother also has a TD account in her name. I am hopeful that I can "gift" the bonds to her by simply transferring them from my account to her account; however, the ownership designation on the electronic bonds needs to be changed from my name to her name, and I don't know if that would be automatically done, or has to be done in some other way.
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runner26
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Re: Gifting I-Bonds - who is liable for tax on accumulated interest?

Post by runner26 » Fri Mar 23, 2018 6:09 pm

The way I read the rules at TD is that you have to have indicated they were gifts at the time of purchase and placed them in your gift box at the time of purchase before transfering.

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HueyLD
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Re: Gifting I-Bonds - who is liable for tax on accumulated interest?

Post by HueyLD » Fri Mar 23, 2018 6:19 pm

If the OP owns the I bond and wants to transfer the ownership to his mother, the OP will be responsible for all accrued interest on the date of transfer.

This rule was put in place to prevent people from tax shifting.

The TD has this information clearly stated on their site.

CULater
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Re: Gifting I-Bonds - who is liable for tax on accumulated interest?

Post by CULater » Fri Mar 23, 2018 9:15 pm

HueyLD wrote:
Fri Mar 23, 2018 6:19 pm
If the OP owns the I bond and wants to transfer the ownership to his mother, the OP will be responsible for all accrued interest on the date of transfer.

This rule was put in place to prevent people from tax shifting.

The TD has this information clearly stated on their site.
Somewhere?
May you have the hindsight to know where you've been, The foresight to know where you're going, And the insight to know when you've gone too far. ~ Irish Blessing

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Flobes
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Re: Gifting I-Bonds - who is liable for tax on accumulated interest?

Post by Flobes » Fri Mar 23, 2018 9:36 pm

CULater wrote:
Fri Mar 23, 2018 9:15 pm
HueyLD wrote:
Fri Mar 23, 2018 6:19 pm
If the OP owns the I bond and wants to transfer the ownership to his mother, the OP will be responsible for all accrued interest on the date of transfer.

This rule was put in place to prevent people from tax shifting.

The TD has this information clearly stated on their site.
Somewhere?
HueyLD is correct.

Assuming the terse "Somewhere?" ^ is seeking a citation:
Tax Considerations for IBonds: Who Owes The Tax

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