IRS refund bigger than on return and they sent 12 ibonds

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fundtalker123
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IRS refund bigger than on return and they sent 12 ibonds

Post by fundtalker123 »

Two things happened with my 2020 IRS refund I didn't expect:

1. I requested $5000 of the refund as ibonds. I was sort of expecting to get ONE $5000 bond. Instead I got 12 separate letters with: 4x$1000, 1x$500, 1x$200, and 6x$50. I'm glad they add up to the right total, but I'm annoyed since I was thinking I want to convert them to electronic and I'm imagining that converting 12 of them is going to take much longer to deal with than converting just one? Has anyone done it who can comment?

2. The remaining part of my refund per my filed return was supposed to be $5,092 to be wired to my bank. Instead I got a deposit of $5,320.56. I never previously got back more than reported on my form, so I'm puzzled. I filed on 5/17 electronically with TurboTax. Could it be that they already quickly analyzed my return and determined that I should get a $228.56 bigger refund (and they will be sending me a letter soon explaining why?) Or did they just screw up?
tomsense76
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Re: IRS refund doesn't match return and they sent 12 ibonds

Post by tomsense76 »

Just got my paper I Bonds and have the exact same breakdown.

Agree thought it was weird to use 1 envelope for each bond (would have easily fit all in 1 envelope). Maybe they have an automated process that needs to handle them this way? Or they are concerned about them get destroyed in the mail? Idk

On this TD page, they explain the largest denomination is $1,000. So they don't actually print a $5,000 I Bond. Though in theory they could give only 5 $1,000 I Bonds. The reasoning they use is in this paragraph:
If you buy more than $250 of savings bonds, we will use $50 denominations to fill the first $250 and the fewest possible number of additional bonds for the remainder. For example, if you request $1,000 in paper I bonds, you will receive six $50 bonds, one $200 bond, and one $500 bond.
So the first $250 is 5 $50 I Bonds. Then they need to round that out so add 1 $50 I Bond to get to $300. After that they can use 1 $200 I Bond and 1 $500 I Bond to get to $1,000 and the rest are filled with $1,000 I Bonds to $5,000.

TBH am kind of grateful that they did break them down in those denominations. It's kind of handy to have the smaller ones to cash in when you only need a little bit of cash.

While I haven't gone through the process of converting them, there are a few threads out there on this. People don't seem to have any issue sending them in and getting them converted.

Yeah the IRS can pretty much compute your return for you. Likely there was an error in the tax form and they fixed it. Has happened to me before as well. I don't recall getting an explanation. Just the additional money.
"Anyone who claims to understand quantum theory is either lying or crazy" -- Richard Feynman
Mudpuppy
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Re: IRS refund bigger than on return and they sent 12 ibonds

Post by Mudpuppy »

fundtalker123 wrote: Mon Jun 07, 2021 9:27 pm Two things happened with my 2020 IRS refund I didn't expect:

1. I requested $5000 of the refund as ibonds. I was sort of expecting to get ONE $5000 bond. Instead I got 12 separate letters with: 4x$1000, 1x$500, 1x$200, and 6x$50. I'm glad they add up to the right total, but I'm annoyed since I was thinking I want to convert them to electronic and I'm imagining that converting 12 of them is going to take much longer to deal with than converting just one? Has anyone done it who can comment?
As tomsense76 pointed out, this is just the way the IRS issues paper I-Bonds for refunds. There's probably no point speculating why they do that. Just accept that is it this way.
fundtalker123 wrote: Mon Jun 07, 2021 9:27 pm 2. The remaining part of my refund per my filed return was supposed to be $5,092 to be wired to my bank. Instead I got a deposit of $5,320.56. I never previously got back more than reported on my form, so I'm puzzled. I filed on 5/17 electronically with TurboTax. Could it be that they already quickly analyzed my return and determined that I should get a $228.56 bigger refund (and they will be sending me a letter soon explaining why?) Or did they just screw up?
Since you filed in May, see this other thread for a plausible explanation on this one: viewtopic.php?f=2&t=348846
HomeStretch
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Re: IRS refund bigger than on return and they sent 12 ibonds

Post by HomeStretch »

fundtalker123 wrote: Mon Jun 07, 2021 9:27 pm … I'm imagining that converting 12 of them is going to take much longer to deal with than converting just one? Has anyone done it who can comment? …
I think the conversion will take the same length of time whether there are 12 bonds or 1 bond. It would be easier and cheaper if the bond refund could be deposited electronically through the IRS. But it is a relatively small time/cost investment to be able to buy $5k more in I-Bonds.

I too received 12 I-Bonds totaling $5k as part of my federal tax refund. It took 1/2 hour for me to complete the TreasuryDirect (TD) manifest and mail the package via USPS certified mail. Two days after delivery, TD sent me an email late last week acknowledging receipt. I expect the conversion to be done soon, after which I will move them from my TD conversion account to my TD main account.

Edit: TD completed the conversion on my tax refund I-Bonds in 9 business days. It took me about 10 minutes to transfer the converted bonds to my main account and assign “transact” rights to spouse.
Last edited by HomeStretch on Wed Jun 16, 2021 12:30 pm, edited 1 time in total.
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fundtalker123
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Re: IRS refund bigger than on return and they sent 12 ibonds

Post by fundtalker123 »

Mudpuppy wrote: Tue Jun 08, 2021 2:33 am
fundtalker123 wrote: Mon Jun 07, 2021 9:27 pm Two things happened with my 2020 IRS refund I didn't expect:

1. I requested $5000 of the refund as ibonds. I was sort of expecting to get ONE $5000 bond. Instead I got 12 separate letters with: 4x$1000, 1x$500, 1x$200, and 6x$50. I'm glad they add up to the right total, but I'm annoyed since I was thinking I want to convert them to electronic and I'm imagining that converting 12 of them is going to take much longer to deal with than converting just one? Has anyone done it who can comment?
As tomsense76 pointed out, this is just the way the IRS issues paper I-Bonds for refunds. There's probably no point speculating why they do that. Just accept that is it this way.
fundtalker123 wrote: Mon Jun 07, 2021 9:27 pm 2. The remaining part of my refund per my filed return was supposed to be $5,092 to be wired to my bank. Instead I got a deposit of $5,320.56. I never previously got back more than reported on my form, so I'm puzzled. I filed on 5/17 electronically with TurboTax. Could it be that they already quickly analyzed my return and determined that I should get a $228.56 bigger refund (and they will be sending me a letter soon explaining why?) Or did they just screw up?
Since you filed in May, see this other thread for a plausible explanation on this one: viewtopic.php?f=2&t=348846
Thanks, that (interest paid) must be the explanation!
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Re: IRS refund doesn't match return and they sent 12 ibonds

Post by fundtalker123 »

tomsense76 wrote: Mon Jun 07, 2021 9:43 pm Just got my paper I Bonds and have the exact same breakdown.

Agree thought it was weird to use 1 envelope for each bond (would have easily fit all in 1 envelope). Maybe they have an automated process that needs to handle them this way? Or they are concerned about them get destroyed in the mail? Idk

On this TD page, they explain the largest denomination is $1,000. So they don't actually print a $5,000 I Bond. Though in theory they could give only 5 $1,000 I Bonds. The reasoning they use is in this paragraph:
If you buy more than $250 of savings bonds, we will use $50 denominations to fill the first $250 and the fewest possible number of additional bonds for the remainder. For example, if you request $1,000 in paper I bonds, you will receive six $50 bonds, one $200 bond, and one $500 bond.
So the first $250 is 5 $50 I Bonds. Then they need to round that out so add 1 $50 I Bond to get to $300. After that they can use 1 $200 I Bond and 1 $500 I Bond to get to $1,000 and the rest are filled with $1,000 I Bonds to $5,000.

TBH am kind of grateful that they did break them down in those denominations. It's kind of handy to have the smaller ones to cash in when you only need a little bit of cash.

While I haven't gone through the process of converting them, there are a few threads out there on this. People don't seem to have any issue sending them in and getting them converted.

Yeah the IRS can pretty much compute your return for you. Likely there was an error in the tax form and they fixed it. Has happened to me before as well. I don't recall getting an explanation. Just the additional money.
Thanks for pointing out that this was just their stated policy. It is funny, because I could have sworn that maybe ~10 years ago that I bought a $5,000 face value paper ibond. If I'm not remembering incorrectly I guess they discontinued those.

Also, it is funny to me that they give you small e.g. $50 bonds as part of $5000 in case you need a few bucks and want to walk into a bank to cash in. My Boglehead intent is to keep the whole $5k invested for the full 20 yr. I would likely never need $50 so much that I'd cash in a precious ibond :D . Of course, intents can change...
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Re: IRS refund bigger than on return and they sent 12 ibonds

Post by dratkinson »

You can expect a 1099INT next Jan from the IRS reporting the interest earned.
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Re: IRS refund bigger than on return and they sent 12 ibonds

Post by tomsense76 »

dratkinson wrote: Tue Jun 08, 2021 10:04 am You can expect a 1099INT next Jan from the IRS reporting the interest earned.
TIL. Do they mail it to you? Is there a way to get this information electronically?
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tomsense76
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Re: IRS refund doesn't match return and they sent 12 ibonds

Post by tomsense76 »

fundtalker123 wrote: Tue Jun 08, 2021 9:52 am
tomsense76 wrote: Mon Jun 07, 2021 9:43 pm Just got my paper I Bonds and have the exact same breakdown.

Agree thought it was weird to use 1 envelope for each bond (would have easily fit all in 1 envelope). Maybe they have an automated process that needs to handle them this way? Or they are concerned about them get destroyed in the mail? Idk

On this TD page, they explain the largest denomination is $1,000. So they don't actually print a $5,000 I Bond. Though in theory they could give only 5 $1,000 I Bonds. The reasoning they use is in this paragraph:
If you buy more than $250 of savings bonds, we will use $50 denominations to fill the first $250 and the fewest possible number of additional bonds for the remainder. For example, if you request $1,000 in paper I bonds, you will receive six $50 bonds, one $200 bond, and one $500 bond.
So the first $250 is 5 $50 I Bonds. Then they need to round that out so add 1 $50 I Bond to get to $300. After that they can use 1 $200 I Bond and 1 $500 I Bond to get to $1,000 and the rest are filled with $1,000 I Bonds to $5,000.

TBH am kind of grateful that they did break them down in those denominations. It's kind of handy to have the smaller ones to cash in when you only need a little bit of cash.

While I haven't gone through the process of converting them, there are a few threads out there on this. People don't seem to have any issue sending them in and getting them converted.

Yeah the IRS can pretty much compute your return for you. Likely there was an error in the tax form and they fixed it. Has happened to me before as well. I don't recall getting an explanation. Just the additional money.
Thanks for pointing out that this was just their stated policy. It is funny, because I could have sworn that maybe ~10 years ago that I bought a $5,000 face value paper ibond. If I'm not remembering incorrectly I guess they discontinued those.

Also, it is funny to me that they give you small e.g. $50 bonds as part of $5000 in case you need a few bucks and want to walk into a bank to cash in. My Boglehead intent is to keep the whole $5k invested for the full 20 yr. I would likely never need $50 so much that I'd cash in a precious ibond :D . Of course, intents can change...
No worries. TBH when I read it the first time I also overlooked the $250 part and assumed they would just send 5 $1,000 I Bonds.

Yeah it's possible they had larger denominations before. The purchase limits use to be higher as well. Plus they were all paper (no TD). Though I'm guessing you know all of that. Anyways wouldn't surprise me

You know initially I had the same thought that I would just send these in too, but I thought it might be handy to keep a few on hand if an emergency arose (just like I do with a bit of cash). I do hope to not cash them in until they mature, but it is nice to have the option. It's like inflation protected cash :happy
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Re: IRS refund doesn't match return and they sent 12 ibonds

Post by Mudpuppy »

fundtalker123 wrote: Tue Jun 08, 2021 9:52 am Thanks for pointing out that this was just their stated policy. It is funny, because I could have sworn that maybe ~10 years ago that I bought a $5,000 face value paper ibond. If I'm not remembering incorrectly I guess they discontinued those.
You could buy a $5k paper I-Bond back when you could buy paper I-Bonds directly (instead of having to do the indirect method of getting paper I-Bonds through your tax refund). I don't recall if the IRS refund ever came in a more condensed fashion or if it's always been this song-and-dance with the $50 ones first.

Edit: Here is TD's list of paper I-Bond denominations, past and current: https://www.treasurydirect.gov/indiv/re ... oklike.htm
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Re: IRS refund bigger than on return and they sent 12 ibonds

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tomsense76 wrote: Tue Jun 08, 2021 3:22 pm
dratkinson wrote: Tue Jun 08, 2021 10:04 am You can expect a 1099INT next Jan from the IRS reporting the interest earned.
TIL. Do they mail it to you? Is there a way to get this information electronically?
Sir, I do not know. Didn't immediately find an answer when I searched: https://www.google.com/search?q=can+i+r ... T+from+IRS

Saw my first 1099INT from IRS last year, and it was mailed. It was a surprise, but it did explain why my refund was larger than anticipated.

This year I'll be answering the question, "Does IRS send 1099INT if interest income earned is <$10?"
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Re: IRS refund bigger than on return and they sent 12 ibonds

Post by Mel Lindauer »

just the way the IRS issues paper I-Bonds for refunds. There's probably no point speculating why they do that.
[OT quoted post deleted by Moderator Misenplace]

Well, I'll speculate and feel pretty sure that I'm right:
1. Treasury has a large storehouse of unused paper I Bonds they want to get rid of. That's why they set up this method of doing so in the first place. The $5k option will likely go away once their supply gets whittled down.
2. They probably have a disproportionate number of $50 I Bonds, since at one time that was probably the most popular option. Folks purchased $50 I Bonds for their kids, grandkids and others birthdays and holidays. $50 bonds were also popular with automatic savings bond purchase plans at the workplace. Lots of folks bought $50 bonds each payday.
3. The number of bonds in other denominations they still have probably decrease as the face amount increases.

Given all that, it only makes sense for them to get rid of the $50 as the first part of the refund, even when the refund is in the thousands. Otherwise, if they used the larger denominations first (say 5 $1000 for a $5k refund), as you'd expect them to do, they'd eventually run out of them and be stuck with tons of $50 and $100 bonds, and folks who wanted $5k in bonds would eventually end up getting 50-100 bonds.

Mystery solved! Let TD post their denial here. :-)
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Re: IRS refund bigger than on return and they sent 12 ibonds

Post by cookymonster »

I partially tore one of my $50 i-bonds when I opened the envelope, but it is still partially together. I like having the paper bonds. Should I convert it to electronic, or is it likely a bank will eventually redeem it?
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Re: IRS refund bigger than on return and they sent 12 ibonds

Post by Mel Lindauer »

cookymonster wrote: Wed Jun 09, 2021 11:19 am I partially tore one of my $50 i-bonds when I opened the envelope, but it is still partially together. I like having the paper bonds. Should I convert it to electronic, or is it likely a bank will eventually redeem it?
Personally, I prefer paper and would hang onto them if they were mine.
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Re: IRS refund bigger than on return and they sent 12 ibonds

Post by kxl19 »

HomeStretch wrote: Tue Jun 08, 2021 7:11 am
fundtalker123 wrote: Mon Jun 07, 2021 9:27 pm … I'm imagining that converting 12 of them is going to take much longer to deal with than converting just one? Has anyone done it who can comment? …

I too received 12 I-Bonds totaling $5k as part of my federal tax refund. It took 1/2 hour for me to complete the TreasuryDirect (TD) manifest and mail the package via USPS certified mail. Two days after delivery, TD sent me an email late last week acknowledging receipt. I expect the conversion to be done soon, after which I will move them from my TD conversion account to my TD main account.
Is it simple to move the bonds between the converted account to the main account? I didn’t even realize this was possible.
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Re: IRS refund bigger than on return and they sent 12 ibonds

Post by HomeStretch »

kxl19 wrote: Wed Jun 09, 2021 11:34 pm
HomeStretch wrote: Tue Jun 08, 2021 7:11 am …I expect the conversion to be done soon, after which I will move them from my TD conversion account to my TD main account.
Is it simple to move the bonds between the converted account to the main account? I didn’t even realize this was possible.
It’s easy to transfer your converted I-Bonds from your linked conversion account to your main account. In your online account, look for “Transfer Securities” under the “ManageDirect” tab. This thread has more detail on how to transfer in a post by tibbits:
viewtopic.php?p=3038713&sid=b0af0ec9624 ... 5#p3038713

If the bonds are co-owned, you can also assign “View/Transact” rights to the second owner:
https://www.treasurydirect.gov/indiv/he ... ights3.htm
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Re: IRS refund bigger than on return and they sent 12 ibonds

Post by dcabler »

Yes indeed. We purchase our $10K each every January, electronically via TD. Nice and tidy when we go into TD and look up the current value. But we also started adding the $5K tax refund adder a few years ago. Likewise surprised that they did it with a bunch of smaller denominations. After electronic conversion, my beautiful TD account page is now cluttered. :D

Once a month, I take the current value of all of our Ibond holdings and update my investment tracking spreadsheet. Easy-Peasy for the $10K per year ones, but requires a bit of summing for the $5K per tax refund since I choose to categorize by the year in which I made the purchase.

Pro TIP for a very small amount of future convenience - When you do the conversion, pay attention to how you create the manifest. I choose to list the largest denominations first, then the next largest, etc. I believe this is also the order they will appear in TD once converted. Makes it a tad more convenient to quickly see that there are, for example X bonds at $1000, Y bonds at $50, etc for a given year's purchase and to see the current value for the same denominations since they're adjacent to each other. The first year we did the conversion, we didn't realize this and that year's Ibonds appear on the website in random order.

Cheers
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Re: IRS refund bigger than on return and they sent 12 ibonds

Post by tomsense76 »

Mel Lindauer wrote: Wed Jun 09, 2021 9:57 pm
cookymonster wrote: Wed Jun 09, 2021 11:19 am I partially tore one of my $50 i-bonds when I opened the envelope, but it is still partially together. I like having the paper bonds. Should I convert it to electronic, or is it likely a bank will eventually redeem it?
Personally, I prefer paper and would hang onto them if they were mine.
I think cookymonster is worried as it is ripped

Maybe this TD page helps? Mel may have better recommendations
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Re: IRS refund bigger than on return and they sent 12 ibonds

Post by Mel Lindauer »

tomsense76 wrote: Thu Jun 10, 2021 2:28 pm
Mel Lindauer wrote: Wed Jun 09, 2021 9:57 pm
cookymonster wrote: Wed Jun 09, 2021 11:19 am I partially tore one of my $50 i-bonds when I opened the envelope, but it is still partially together. I like having the paper bonds. Should I convert it to electronic, or is it likely a bank will eventually redeem it?
Personally, I prefer paper and would hang onto them if they were mine.
I think cookymonster is worried as it is ripped

Maybe this TD page helps? Mel may have better recommendations
You could simply go to a bank and attempt to redeem it, and see if they'll take it in it's current condition. If not, this would probably fall into the same category as lost or stolen bonds (there are forms to replace those, so perhaps that's the way to go).
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