buying Tbills

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Retired1809
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Re: buying Tbills

Post by Retired1809 »

When is the deadline for entering orders at Fidelity Brokerage for new treasury bills each week? And is there a time period during which you can cancel an order?
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Kevin M
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Re: buying Tbills

Post by Kevin M »

Retired1809 wrote: Thu May 12, 2022 3:26 pm When is the deadline for entering orders at Fidelity Brokerage for new treasury bills each week? And is there a time period during which you can cancel an order?
You must enter your order before early morning on the auction close date. I believe you should be able to cancel your order anytime before the.

Currently Fidelity shows four auctions, two closing 5/16, one 5/17 and one 5/18.

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Kevin M
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Re: buying Tbills

Post by Kevin M »

See this TD page for details of auctions: Auctions In Depth

From that page:
Noncompetitive bids must be received prior to the noncompetitive closing time, which is stated in the auction announcement. The noncompetitive closing time for bills is normally 11:00 a.m. Eastern Time on auction day and the noncompetitive closing time for notes, bonds, FRNs, and TIPS is normally 12:00 noon Eastern Time on auction day. See Treasury Marketable Securities Offering Announcement Press Releases for specific auction information.
I'm not sure if Fidelity adheres exactly to this, but I would just be sure to enter my order the day before the close or earlier.

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jeffyscott
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Re: buying Tbills

Post by jeffyscott »

Retired1809 wrote: Thu May 12, 2022 3:26 pm When is the deadline for entering orders at Fidelity Brokerage for new treasury bills each week? And is there a time period during which you can cancel an order?
On Schwab, if I click on "buy" for an auction, there is a message on the order entry page that says:
Order entry cutoff on the day of the auction is 9.30 AM ET for US T-Bills and 10.30 AM ET for US T-Notes.

I get the same message if I click on the 10 year TIPS auction, so it's not really clear, since that is not a bill or a note (or is it?). I'm assuming it would be the 10:30 time for that, since Treasury's deadline is the same for TIPS and Notes.

Perhaps Fidelity also gives a message like that, if you pretend that you are going to buy one?
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Retired1809
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Re: buying Tbills

Post by Retired1809 »

Thanks, Kevin and Jeffy,

Your answers, particularly about Fidelity, were very helpful. Treasury bill rates provided the incentive I needed to close accounts at three banks and HMBradley that I had opened just to get some decent interest rates. Feels good to consolidate and simplify.
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Kevin M
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Re: buying Tbills

Post by Kevin M »

jeffyscott wrote: Thu May 12, 2022 4:03 pm Perhaps Fidelity also gives a message like that, if you pretend that you are going to buy one?
I went all the way to the order preview screen, and did not see such a message.
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Alkali Ike
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Re: buying Tbills

Post by Alkali Ike »

Does anyone know when the interest on t-bills is taxed ? Is it based on the purchase date, the maturity date or is it prorated monthly ?
For example, say I purchase a 52 week bill which matures in May of 2023. When would the interest fall taxable ? :?:
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Kevin M
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Re: buying Tbills

Post by Kevin M »

Alkali Ike wrote: Fri May 13, 2022 1:30 pm Does anyone know when the interest on t-bills is taxed ? Is it based on the purchase date, the maturity date or is it prorated monthly ?
For example, say I purchase a 52 week bill which matures in May of 2023. When would the interest fall taxable ? :?:
The tax year it matures. Do this web search: "when is treasury bill interest taxed".
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Kenneth Almquist
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Re: buying Tbills

Post by Kenneth Almquist »

Kevin M wrote: Fri May 13, 2022 3:21 pm
Alkali Ike wrote: Fri May 13, 2022 1:30 pm Does anyone know when the interest on t-bills is taxed ? Is it based on the purchase date, the maturity date or is it prorated monthly ?
For example, say I purchase a 52 week bill which matures in May of 2023. When would the interest fall taxable ? :?:
The tax year it matures. Do this web search: "when is treasury bill interest taxed".
I suspect that if you sell a bill before maturity, the interest would be taxed in the year that you sold the bill rather than the year that the bill matures. However, I can't find anything on the web that confirms this.
secondopinion
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Re: buying Tbills

Post by secondopinion »

Kenneth Almquist wrote: Fri May 13, 2022 4:02 pm
Kevin M wrote: Fri May 13, 2022 3:21 pm
Alkali Ike wrote: Fri May 13, 2022 1:30 pm Does anyone know when the interest on t-bills is taxed ? Is it based on the purchase date, the maturity date or is it prorated monthly ?
For example, say I purchase a 52 week bill which matures in May of 2023. When would the interest fall taxable ? :?:
The tax year it matures. Do this web search: "when is treasury bill interest taxed".
I suspect that if you sell a bill before maturity, the interest would be taxed in the year that you sold the bill rather than the year that the bill matures. However, I can't find anything on the web that confirms this.
I believe you have to pay taxes even if you hold until maturity. You have to pay the taxes for "phantom income".
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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Kevin M
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Re: buying Tbills

Post by Kevin M »

secondopinion wrote: Fri May 13, 2022 4:11 pm
Kenneth Almquist wrote: Fri May 13, 2022 4:02 pm
Kevin M wrote: Fri May 13, 2022 3:21 pm
Alkali Ike wrote: Fri May 13, 2022 1:30 pm Does anyone know when the interest on t-bills is taxed ? Is it based on the purchase date, the maturity date or is it prorated monthly ?
For example, say I purchase a 52 week bill which matures in May of 2023. When would the interest fall taxable ? :?:
The tax year it matures. Do this web search: "when is treasury bill interest taxed".
I suspect that if you sell a bill before maturity, the interest would be taxed in the year that you sold the bill rather than the year that the bill matures. However, I can't find anything on the web that confirms this.
I believe you have to pay taxes even if you hold until maturity. You have to pay the taxes for "phantom income".
This is true for notes and bonds, but not for bills. Do the web search I recommended. One link you should find near the top of the search is a TreasuryDirect reference that explains it.
For a bill held in TreasuryDirect, you can view your Form 1099-INT online and print it. The form is posted at the beginning of the year, in the year after the bill matures.
and
NOTE: If a bill in TreasuryDirect matures at the end of a year and we don't issue payment until the first days of the following year, the interest for that bill will be shown on the 1099-INT for the year in which the bill matured, not for the year in which the interest was paid.
I don't like the term phantom income. You typically pay taxes annually on accrued market discount for notes and bonds. I see little difference between this and a long-term investor who reinvests dividends in a bond fund, and who almost certainly will not need the cash flow from the bond fund dividends.

You for sure pay taxes on bills for the tax year you sell if you don't hold to maturity.

Kevin
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secondopinion
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Re: buying Tbills

Post by secondopinion »

Kevin M wrote: Fri May 13, 2022 4:57 pm
secondopinion wrote: Fri May 13, 2022 4:11 pm
Kenneth Almquist wrote: Fri May 13, 2022 4:02 pm
Kevin M wrote: Fri May 13, 2022 3:21 pm
Alkali Ike wrote: Fri May 13, 2022 1:30 pm Does anyone know when the interest on t-bills is taxed ? Is it based on the purchase date, the maturity date or is it prorated monthly ?
For example, say I purchase a 52 week bill which matures in May of 2023. When would the interest fall taxable ? :?:
The tax year it matures. Do this web search: "when is treasury bill interest taxed".
I suspect that if you sell a bill before maturity, the interest would be taxed in the year that you sold the bill rather than the year that the bill matures. However, I can't find anything on the web that confirms this.
I believe you have to pay taxes even if you hold until maturity. You have to pay the taxes for "phantom income".
This is true for notes and bonds, but not for bills. Do the web search I recommended. One link you should find near the top of the search is a TreasuryDirect reference that explains it.
For a bill held in TreasuryDirect, you can view your Form 1099-INT online and print it. The form is posted at the beginning of the year, in the year after the bill matures.
and
NOTE: If a bill in TreasuryDirect matures at the end of a year and we don't issue payment until the first days of the following year, the interest for that bill will be shown on the 1099-INT for the year in which the bill matured, not for the year in which the interest was paid.
I don't like the term phantom income. You typically pay taxes annually on accrued market discount for notes and bonds. I see little difference between this and a long-term investor who reinvests dividends in a bond fund, and who almost certainly will not need the cash flow from the bond fund dividends.

You for sure pay taxes on bills for the tax year you sell if you don't hold to maturity.

Kevin
I did not know that; this entire time I thought it applied to treasury bills as well. I learn something new every day.

I guess "phantom income" is a scary term. :P It is an unfortunately common term, however; I do think something else than that and "accrued market discount" should be used in everyday talk.
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Kevin M
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Re: buying Tbills

Post by Kevin M »

secondopinion wrote: Fri May 13, 2022 5:31 pm I guess "phantom income" is a scary term. :P It is an unfortunately common term, however; I do think something else than that and "accrued market discount" should be used in everyday talk.
If you're interested in the tax aspects, you might as well learn the tax lingo, and accrued market discount (or just market discount) is what it's called on Form 1099-INT, and in tax software.

From Form 1099-INT:
Box 10. For a taxable or tax-exempt covered security, if you made an election under section 1278(b) to include
market discount in income as it accrues and you notified your payer of the election in writing in accordance with
Regulations section 1.6045-1(n)(5), shows the market discount that accrued on the debt instrument during the
year while held by you, unless it was reported on Form 1099-OID. For a taxable or tax-exempt covered security
acquired on or after January 1, 2015, accrued market discount will be calculated on a constant yield basis unless
you notified your payer in writing in accordance with Regulations section 1.6045-1(n)(5) that you did not want to
make a constant yield election for market discount under section 1276(b). Report the accrued market discount on
your income tax return as directed in the Instructions for Form 1040. Market discount on a tax-exempt security is
includible in taxable income as interest income.
(Emphasis mine)

Kevin
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Alkali Ike
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Re: buying Tbills

Post by Alkali Ike »

Kevin M wrote: Fri May 13, 2022 3:21 pm
Alkali Ike wrote: Fri May 13, 2022 1:30 pm Does anyone know when the interest on t-bills is taxed ? Is it based on the purchase date, the maturity date or is it prorated monthly ?
For example, say I purchase a 52 week bill which matures in May of 2023. When would the interest fall taxable ? :?:
The tax year it matures. Do this web search: "when is treasury bill interest taxed".
Thank you Kevin :beer
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