Paper I bonds WILL be available via tax refund in 2012

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Paper I bonds WILL be available via tax refund in 2012

Post by nisiprius » Mon Nov 07, 2011 4:31 pm

[Added] I just got off the phone with Richard Thomas at Public Debt, to whom I was referred when I called the contact number, (304) 480-6319, given in the notice Archie Sinclair pointed to in his post below. Thomas told me--gist, not verbatim quote--that
  • Paper I bonds will still be available in 2012 to those who request them via Form 8888. He says that's definite.
  • "The program will not continue indefinitely" and emphasized that indefinitely means just that--could be a long time, could be a short time.
  • He expects the regular Treasury mail-in order form to be taken down from the website in December, and says that paper bonds absolutely will not be sold via those mail-in order forms after 2011.
This does seem different from what the IRS rep told me.

---------
Originally posted:


Will the "paper bond backdoor" detailed e.g. by the Finance Buff here actually exist?

I called 1-800-829-1040 and asked. I started off by saying I had questions about forms 8888 and 4868. I was transferred to someone who seemed to understand what I was getting at, who handed me off to someone else. I made it clear that the issue was whether it was OK to deliberately overestimate tax liabilities on form 4868, for the purpose of creating a refund, for the purpose of obtaining paper I bonds. I was put on hold for a few minutes while the rep checked. She came back and said "I need to check with someone else to make sure it's OK." When she came back this time, she said "I know our website and the forms refer to paper bonds, but they will not be paper, they will be electronic. We only just got the information about this."

I did not press for details on how this will work, and will leave it to others to dig deeper.

It's notable that the Treasury Direct website still has the mail-in order form and says nothing about it being discontinued, although verbally they have said that it. Perhaps there is still some chaos and disorganization, or perhaps there is a carefully crafted plan and (strictly my imagination here) at midnight of December 31st that form will disappear from their website, and form 8888 will be replaced with a revised version on which you enter your Treasury Direct account number...

Attempting to mail in the mail-in form in 2012, or attempting to file this year's form 8888 in April 2012, might or might not be an effective way to protest and send a message--but I suspect it will not achieve the goal of actually getting paper I bonds, and will probably expose one to frustration, confusion, and irritation.
Last edited by nisiprius on Tue Nov 08, 2011 9:53 am, edited 4 times in total.
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Re: Tax refund in I bonds: might be electronic?

Post by Jay69 » Mon Nov 07, 2011 4:44 pm

All I can say, I cant wait to see what this brings up.

I read just about all the I-bond posts with intrest.
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Re: Tax refund in I bonds: might be electronic?

Post by Archie Sinclair » Mon Nov 07, 2011 5:59 pm

Below is the official regulation discontinuing the sale of paper I Bonds, published in the Federal Register on October 28, 2011, about three months after the initial press release:
http://www.regulations.gov/#!documentDe ... _0001-0039

It says: "Individuals will also be able to obtain paper Series I savings bonds with their tax refunds through Internal Revenue Service Form 8888."

So, as of ten days ago, this was still the government's policy. Of course, it's possible that the left hand doesn't know what the right hand is doing. But I'm skeptical that the Bureau of the Public Debt and the IRS can move quickly enough to stop people from electing to receive I bonds as their refunds next year.

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Re: Tax refund in I bonds: might be electronic?

Post by theresa » Mon Nov 07, 2011 6:53 pm

There are still people that do not have a computer...I'm thinking the government will push the option of electing to receive your refund in an electronic I-Bond but still provide paper I-Bonds if necessary. At least I hope so.

Theresa

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Re: Tax refund in I bonds: might be electronic?

Post by nisiprius » Mon Nov 07, 2011 7:38 pm

Archie Sinclair wrote:Below is the official regulation discontinuing the sale of paper I Bonds, published in the Federal Register on October 28, 2011, about three months after the initial press release:
http://www.regulations.gov/#!documentDe ... _0001-0039

It says: "Individuals will also be able to obtain paper Series I savings bonds with their tax refunds through Internal Revenue Service Form 8888."

So, as of ten days ago, this was still the government's policy. Of course, it's possible that the left hand doesn't know what the right hand is doing. But I'm skeptical that the Bureau of the Public Debt and the IRS can move quickly enough to stop people from electing to receive I bonds as their refunds next year.
Thanks for the official document.

I've sent the following email to the contact email address given in the notice, elisha.whipkey@bpd.treas.gov and will see whether I get any reply.
I'm looking at

http://www.regulations.gov/#!documentDe ... _0001-0039

and I can't figure it out. It says, in various places:

1) Effective date: January 1, 2012
2) the issuance of paper (definitive) savings bonds will be discontinued as of January 1, 2012.
3) Although no new paper savings bonds will be issued after the effective date…
4) Individuals will ... be able to obtain paper Series I savings bonds with their tax refunds through Internal Revenue Service Form 8888.

So, what happens in April, 2012? Can I request my refund in the form of paper Series I savings bonds at that time? How will my request be filled if no paper savings bonds will be issued after January 1, 2012?

I think you need to be aware that there are numerous postings and discussions on the Internet by people who like paper savings bonds and expect to get them in 2012 via form 8888. For example, see:

http://thefinancebuff.com/backdoor-to-p ... bonds.html

If it is not true that paper I bonds will be available in 2012 via form 8888, the Treasury needs to make this clear.
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Re: Tax refund in I bonds: might be electronic?

Post by DavidC » Mon Nov 07, 2011 10:40 pm

nisiprius wrote:Will the "paper bond backdoor" detailed e.g. by the Finance Buff here actually exist?
That's the million dollar... or should I say $5000 question.
nisiprius wrote:I called 1-800-829-1040 and asked. I started off by saying I had questions about forms 8888 and 4868. I was transferred to someone who seemed to understand what I was getting at, who handed me off to someone else. I made it clear that the issue was whether it was OK to deliberately overestimate tax liabilities on form 4868, for the purpose of creating a refund, for the purpose of obtaining paper I bonds.
For what it's worth I had no intention of lying on that form (lying to IRS seems like a bad idea). I was actually leaning on submitting an estimated payment in early January instead (note: I am not subject to quarterly estimated tax payments).
nisiprius wrote:I was put on hold for a few minutes while the rep checked. She came back and said "I need to check with someone else to make sure it's OK." When she came back this time, she said "I know our website and the forms refer to paper bonds, but they will not be paper, they will be electronic. We only just got the information about this."

I did not press for details on how this will work, and will leave it to others to dig deeper.
I can all but guarantee what that literally rep said is wrong as I cannot imagine the IRS wanting to directly request electronic bonds on the taxpayer's behalf. Of course that doesn't really indicate whether paper bonds will be available... or not.
nisiprius wrote:It's notable that the Treasury Direct website still has the mail-in order form and says nothing about it being discontinued, although verbally they have said that it. Perhaps there is still some chaos and disorganization, or perhaps there is a carefully crafted plan and (strictly my imagination here) at midnight of December 31st that form will disappear from their website, and form 8888 will be replaced with a revised version on which you enter your Treasury Direct account number...

Attempting to mail in the mail-in form in 2012, or attempting to file this year's form 8888 in April 2012, might or might not be an effective way to protest and send a message--but I suspect it will not achieve the goal of actually getting paper I bonds, and will probably expose one to frustration, confusion, and irritation.
I would never suggest trying to submit the 2010 version of form 8888 for the 2011 tax year. I would have preferred you didn't ask this question until next year when we had a 2011 form 8888 PDF that lists paper bonds as available... but I suppose it is too late now. :wink:

To be fair, even under my more optimistic scenarios I only expected this "backdoor" to work for one to two tax seasons. I would have more confidence one way or the other if I knew the authority (law, executive order, etc.) that added the option of receiving paper bonds via tax refund in the first place. Eg if it is a purely administrative decision from the Treasury (as opposed to say an executive order from the President) then the "backdoor" is probably an illusion that can be shut at anytime.
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Re: Tax refund in I bonds: might be electronic?

Post by market timer » Mon Nov 07, 2011 10:50 pm

A true protest would be to dump the currency that forces you to beg for ways to preserve buying power.

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Re: Tax refund in I bonds: might be electronic?

Post by Archie Sinclair » Mon Nov 07, 2011 11:39 pm

DavidC wrote:I would have more confidence one way or the other if I knew the authority (law, executive order, etc.) that added the option of receiving paper bonds via tax refund in the first place. Eg if it is a purely administrative decision from the Treasury (as opposed to say an executive order from the President) then the "backdoor" is probably an illusion that can be shut at anytime.
Here it is:
Internal Revenue Code wrote: Sec. 6402. Authority to make credits or refunds
(a) General rule
In the case of any overpayment, the Secretary, within the
applicable period of limitations, may credit the amount of such
overpayment, including any interest allowed thereon, against any
liability in respect of an internal revenue tax on the part of the
person who made the overpayment and shall, subject to subsections
(c), (d), and (e) refund any balance to such person.
Neither the law, nor the regulations implementing it (26 CFR 301), go into any detail about what form the refund should take. The I Bond-buying program appears to be a simple service provided by the Secretary of the Treasury, and he could probably stop providing this service at any time.

However, I assume there are administrative if not legal obstacles to changing the refund process on short notice.

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Re: Tax refund in I bonds: might be electronic?

Post by tfb » Tue Nov 08, 2011 1:03 am

nisiprius wrote:I called 1-800-829-1040 and asked. I started off by saying I had questions about forms 8888 and 4868. I was transferred to someone who seemed to understand what I was getting at, who handed me off to someone else. I made it clear that the issue was whether it was OK to deliberately overestimate tax liabilities on form 4868, for the purpose of creating a refund, for the purpose of obtaining paper I bonds.
What was the answer on this main question besides the format of the bonds?
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Re: Tax refund in I bonds: might be electronic?

Post by nisiprius » Tue Nov 08, 2011 7:15 am

tfb wrote:
nisiprius wrote:I called 1-800-829-1040 and asked. I started off by saying I had questions about forms 8888 and 4868. I was transferred to someone who seemed to understand what I was getting at, who handed me off to someone else. I made it clear that the issue was whether it was OK to deliberately overestimate tax liabilities on form 4868, for the purpose of creating a refund, for the purpose of obtaining paper I bonds.
What was the answer on this main question besides the format of the bonds?
I didn't get an answer on that. Nope, I didn't do a good job of following through on my question. To tell the truth, I was sufficiently taken aback by her answer that I clutched. Sorry. I screwed up. I should have stuck with that until I got an answer.

But 1-800-829-1040 is there for everyone, it's not my secret channel into the Federal government, why don't some other people step up to the plate and call them? You do not even need to identify yourself if you're not asking them to look into your account, though I've no doubt they have Calling Number ID on the line. I spent some time on hold, not a lot, maybe fifteen minutes from start to finish. Quite seriously, I think the chances of getting good answers go up if they get repeated questions--it will prompt someone to put together a well-researched reply and goose it up into the "frequently asked questions" category.

(Wild personal speculation ahead. I just do not think the "back door" will work for long. Maybe they'll keep it open through April 2012, if for no better reason that they won't be swift enough to shut it down that quickly. I note that Form 8888 says "An account can be... [a] TreasuryDirect® online account." So the electronic route has always been available as an option. I suspect at some point bond purchases just won't work unless you provide details of a TreasuryDirect account to deposit them in; either they'll send you a letter saying sorry, no paper bonds for you, provide us with your Treasury Direct account number--which will probably cost them more than printing and mailing the bond itself, sigh--or they'll just kick your refund back as a check or direct deposit.)
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Re: Tax refund in I bonds: might be electronic?

Post by HueyLD » Tue Nov 08, 2011 7:35 am

The year 2011 version of Form 8888 is already available http://www.irs.gov/pub/irs-pdf/f8888.pdf and it says under PART II: "Complete this part if you want to buy paper bonds with a portion of your refund."

I will assume that it can be done for year 2011 until the IRS changes the form/instructions.

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by nisiprius » Tue Nov 08, 2011 9:41 am

I edited the thread title and the opening post to add new information. Richard Thomas of the Bureau of Public Dept says that paper I bonds will definitely be available in 2012 to those who request tax refunds in the form of paper I bonds using IRS form 8888.
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Re: Tax refund in I bonds: might be electronic?

Post by tfb » Tue Nov 08, 2011 11:10 am

nisiprius wrote:I didn't get an answer on that. Nope, I didn't do a good job of following through on my question. To tell the truth, I was sufficiently taken aback by her answer that I clutched. Sorry. I screwed up. I should have stuck with that until I got an answer.
A cardinal rule I learned from deal site FatWallet is "if you don't want the deal killed, don't call." A deal will continue until the wrong person on the other end gets wind of it. I suspect the SS do-over got killed this way.

There isn't much of a downside of overpaying taxes and filling out a Form 8888. As mamster wrote, it's OK to give the government an interest-free loan. The worst would be that you get the money back. So just follow the program, fill out the form, wait and see what happens. Don't put this on higher-ups' radar.
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Re: Tax refund in I bonds: might be electronic?

Post by xerty24 » Tue Nov 08, 2011 11:43 am

tfb wrote:A cardinal rule I learned from deal site FatWallet is "if you don't want the deal killed, don't call." A deal will continue until the wrong person on the other end gets wind of it. I suspect the SS do-over got killed this way.

So just follow the program, fill out the form, wait and see what happens. Don't put this on higher-ups' radar.
+1. Hassling people about what might be viewed as a "loophole" just encourages them to report it for removal so they can tell you and subsequent callers to stuff it.
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by VictoriaF » Tue Nov 08, 2011 12:01 pm

I-Bonds are a consumer product. We now have a Consumer Financial Protection Bureau (CFPB), http://www.consumerfinance.gov/ . Should not it be CFPB's role to ensure that consumers have access to $10k/year of inflation-indexed savings bonds?

If the Treasury's goal was to cut the cost of handling paper I-Bonds, they are only going to increase the complexity of dealing with I-Bonds through tax returns and the IRS. A simpler solution would be to raise the electronic I-Bonds maximum to $10k.

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Re: Tax refund in I bonds: might be electronic?

Post by nisiprius » Tue Nov 08, 2011 12:40 pm

tfb wrote:A cardinal rule I learned from deal site FatWallet is "if you don't want the deal killed, don't call." A deal will continue until the wrong person on the other end gets wind of it.
I will take that into consideration in future.
I suspect the SS do-over got killed this way.
Unlikely. I think it is far more likely that what brought it to their attention was 1) an increase in the number of people filing, and 2) a 2008 SSA Inspector General's report
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Re: Tax refund in I bonds: might be electronic?

Post by DavidC » Wed Nov 09, 2011 10:27 pm

HueyLD wrote:The year 2011 version of Form 8888 is already available http://www.irs.gov/pub/irs-pdf/f8888.pdf and it says under PART II: "Complete this part if you want to buy paper bonds with a portion of your refund."
You are right of course, it clearly says "2011." I really thought it said 2010 for some reason the last time I downloaded the form. :oops:
tfb wrote:A cardinal rule I learned from deal site FatWallet is "if you don't want the deal killed, don't call." A deal will continue until the wrong person on the other end gets wind of it. I suspect the SS do-over got killed this way.
+1... although FatWallet has also proven that even discussing a good deal on forums can get a deal killed... for example it seems that FW forum talk that finally leaked out to the "regular" media helped kill the US mint shipping dollar coins via credit card program. To be fair though the US mint had just about emptied their excess inventory anyway so it wasn't all FW's fault.
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by beardsworth » Tue Dec 06, 2011 1:09 pm

We're still trying to decide whether to deliberately overpay our final 2011 estimated tax (due by mid–January 2012) in order to use the "back door" method to purchase more paper I Bonds.

Never having done it before (didn't even know the possibility existed until this and other "end of paper Savings Bonds" threads on Bogleheads), we don't know how well it works––or doesn't. But the instructions for 2011 IRS Form 8888 certainly do set off some small alarm bells:

"When your bonds will not be issued.
Your bonds will not be issued if any of the following apply.
• The bond request is not a multiple of $50.
• You enter more than one name on line 5b, 5c, 6b, or 6c.
[the form's lines for purchasing bonds in the name of Person A––which can also be the taxpayer or spouse––with Person B as co–owner or beneficiary]
• Your refund is decreased because of a math error. Instead, your entire refund will be sent to you in the form of a check.
• Your refund is offset for any reason."


Now, the first two of those conditions––requesting that the allocation to paper I Bonds be a multiple of $50, and not naming more than one main owner or more than one co–owner (or beneficiary)––are quite easily fulfilled. But it seems to me that the third and fourth items create rather large escape hatches for Treasury to avoid––if it wishes to do so––issuing refunds in the form of paper I Bonds. One very minor error on all those forms and schedules, or one item questioned by IRS, and your entire refund gets sent to you as plain ol' cash.

With regard to the discussion above about whether refunds taken as bonds will in fact be issued on paper or electronically, the 2011 Form 8888 instructions also note:
"If you complete line 5 or 6 [main owner with co–owner/beneficiary], you are consenting to have the bonds issued using the following two-step process.
1. The bonds will be issued in electronic form in your name (and your spouse’s name if filing jointly). You will not receive these bonds or any notice regarding this part of the process.
2. The bonds will be immediately reissued in the names you have requested and mailed to you."


All of which, IMO, seems unnecessarily cumbersome, even if the first of those two steps is essentially "invisible" to the taxpayer.

Anybody here actually done this before, received a refund as I Bonds? If so, did it go smoothly?

Marc

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by nisiprius » Tue Dec 06, 2011 1:34 pm

MarcMyWord wrote:With regard to the discussion above about whether refunds taken as bonds will in fact be issued on paper or electronically, the 2011 Form 8888 instructions also note:
"If you complete line 5 or 6 [main owner with co–owner/beneficiary], you are consenting to have the bonds issued using the following two-step process.
1. The bonds will be issued in electronic form in your name (and your spouse’s name if filing jointly). You will not receive these bonds or any notice regarding this part of the process.
2. The bonds will be immediately reissued in the names you have requested and mailed to you."
One of the whole points of the exercise for me is co-ownership--the survivor getting quick access to a "cashlike" thingy that can be redeemed quickly for cash.

I don't believe I'm going to deliberately overpay to get the maximum, but I usually do get a refund--so, I give Uncle Sam a free loan, big deal--and I'll probably give it a shot next year. What the above says to me is that the process is likely to be slowish, cumbersome, and glitch-prone. That description screams "manual action required" to me. And I suspect next year this forum will be getting postings from people who were entitled to paper I-bonds but got plain old cash, with fascinating lengthy sagas of trying to get the problem corrected.
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by NYnative » Tue Dec 06, 2011 1:51 pm

It was not slow or cumbersome for me last year. I received 4 $1k and 3 $200 paper I bonds in the mail about a week after I received the odd remaining amount left over in a direct deposit to my credit union (about 4 weeks after filing electronically). I did not overpay on purpose - just have different income streams that all have withholding as if they were the only stream plus some one time home energy improvement credits that upped the refund quite a bit. All bonds were joint with my wife. This year I expect a much lower return, but I will do paper I bonds if the refund is over $1K. Unfortunately, these will not carry the same fixed rates as the one's purchased in 2000, 2001, 2002 and 2003 :cry: .

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by Bongleur » Tue Dec 06, 2011 7:58 pm

They won't actually give you any bonds. They will find that your payments did not match up with your calculations of taxes owed, and since you didn't get it right they will adjust your return. And since they had to adjust it, your money figure on the I-bond request form will be wrong -- so you won't get any bonds.

That's what they did to us for 2010.

EDIT: we paid the exact amount in taxes that our 1040 said -- it was the IRS who screwed up adding up our pre-payments & carryover from the previous year.
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by tarnation » Sat Dec 17, 2011 7:50 pm

hate to revive this, but what about children? Can they overpay and get bonds even though they will owe no taxes?????
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by HueyLD » Sun Dec 18, 2011 8:09 am

Hi Tarnation,

The IRS Form 8888 ( http://www.irs.gov/pub/irs-pdf/f8888.pdf ) doesn't say anything about those w/o tax liabilities. I would go ahead and fill out Form 8888 to ask for savings bonds even for those w/o tax liabilities.

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by tarnation » Sun Dec 18, 2011 10:07 am

HueyLD wrote:Hi Tarnation,

The IRS Form 8888 ( http://www.irs.gov/pub/irs-pdf/f8888.pdf ) doesn't say anything about those w/o tax liabilities. I would go ahead and fill out Form 8888 to ask for savings bonds even for those w/o tax liabilities.
He has never paid any estimated nor ever owed tax. I guess I feel a little sheepish sending one estimated payment on Jan 15 then filing a return just to get the bonds, but hey I didn't make up this ridiculous game.
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by Mel Lindauer » Sun Dec 18, 2011 5:59 pm

tarnation wrote:
HueyLD wrote:Hi Tarnation,

The IRS Form 8888 ( http://www.irs.gov/pub/irs-pdf/f8888.pdf ) doesn't say anything about those w/o tax liabilities. I would go ahead and fill out Form 8888 to ask for savings bonds even for those w/o tax liabilities.
He has never paid any estimated nor ever owed tax. I guess I feel a little sheepish sending one estimated payment on Jan 15 then filing a return just to get the bonds, but hey I didn't make up this ridiculous game.
They make the rules; you're simply playing by them. It's not often when the average Joe can actually benefit from something like this, so enjoy it while you can. My guess is that this backdoor method of getting paper I Bonds isn't going to last very long. In fact, this may well be the last year that option is available.
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by Grt2bOutdoors » Mon Dec 19, 2011 1:03 pm

Mel Lindauer wrote:
tarnation wrote:
HueyLD wrote:Hi Tarnation,

The IRS Form 8888 ( http://www.irs.gov/pub/irs-pdf/f8888.pdf ) doesn't say anything about those w/o tax liabilities. I would go ahead and fill out Form 8888 to ask for savings bonds even for those w/o tax liabilities.
He has never paid any estimated nor ever owed tax. I guess I feel a little sheepish sending one estimated payment on Jan 15 then filing a return just to get the bonds, but hey I didn't make up this ridiculous game.
They make the rules; you're simply playing by them. It's not often when the average Joe can actually benefit from something like this, so enjoy it while you can. My guess is that this backdoor method of getting paper I Bonds isn't going to last very long. In fact, this may well be the last year that option is available.
Hate to beat this to death - is it even possible to pay estimated taxes on behalf of minors even if they have no tax liability, nor have worked? I didn't think that avenue even exists.
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by VictoriaF » Mon Dec 19, 2011 3:31 pm

GRT2BOUTDOORS wrote:
Mel Lindauer wrote:
tarnation wrote:
HueyLD wrote:Hi Tarnation,

The IRS Form 8888 ( http://www.irs.gov/pub/irs-pdf/f8888.pdf ) doesn't say anything about those w/o tax liabilities. I would go ahead and fill out Form 8888 to ask for savings bonds even for those w/o tax liabilities.
He has never paid any estimated nor ever owed tax. I guess I feel a little sheepish sending one estimated payment on Jan 15 then filing a return just to get the bonds, but hey I didn't make up this ridiculous game.
They make the rules; you're simply playing by them. It's not often when the average Joe can actually benefit from something like this, so enjoy it while you can. My guess is that this backdoor method of getting paper I Bonds isn't going to last very long. In fact, this may well be the last year that option is available.
Hate to beat this to death - is it even possible to pay estimated taxes on behalf of minors even if they have no tax liability, nor have worked? I didn't think that avenue even exists.
It appears that starting in 2012, I-Bonds will become I-Bonds, U-Bonds, She-Bonds, He-Bonds, and Their-Children-Bonds. :lol

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by Angst » Mon Dec 19, 2011 8:14 pm

GRT2BOUTDOORS wrote:Hate to beat this to death - is it even possible to pay estimated taxes on behalf of minors even if they have no tax liability, nor have worked? I didn't think that avenue even exists.
If you use the estimated tax prepayment voucher, all it asks for is name, address, amount being prepaid and SSN. I don't know for sure if there will be any problems going this way to create a tax refund with which to purchase I-bonds, but I intend to try (as opposed to filing for an extension). If you do, the prepayment form is due by Jan 15th. You can get the form from the IRS website, or right here:

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by Epsilon Delta » Mon Dec 19, 2011 9:14 pm

The only reason to pay estimated taxes before Jan 15th is if it is needed to avoid under-withholding penalties. If you are paying extra in order to get paper I-bonds this deadline does not apply. The IRS will process estimated tax payments made after Jan 15th.

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by Manbaerpig » Mon Dec 19, 2011 9:16 pm

Epsilon Delta wrote:The only reason to pay estimated taxes before Jan 15th is if it is needed to avoid under-withholding penalties. If you are paying extra in order to get paper I-bonds this deadline does not apply. The IRS will process estimated tax payments made after Jan 15th.

nice :sharebeer

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by Angst » Mon Dec 19, 2011 9:21 pm

Epsilon Delta wrote:The only reason to pay estimated taxes before Jan 15th is if it is needed to avoid under-withholding penalties. If you are paying extra in order to get paper I-bonds this deadline does not apply. The IRS will process estimated tax payments made after Jan 15th.
Thanks for that info!!

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by saddle point » Sat Feb 18, 2012 3:55 pm

Data point: my paper bonds came in the mail today. I followed the instructions at http://thefinancebuff.com/backdoor-to-p ... bonds.html to the letter. The IRS happily accepted my $5,000 payment with extension even though I put down on Form 4868 that my best estimate of my taxes would result in them owing me money without the payment. YMMV of course.

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by tfb » Sat Feb 18, 2012 4:51 pm

saddle point wrote:Data point: my paper bonds came in the mail today. I followed the instructions at http://thefinancebuff.com/backdoor-to-p ... bonds.html to the letter.
Success! So glad it worked out. Did you also purchase electronic bonds to the $10k per person limit in TreasuryDirect?
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by ABQ4804 » Sat Feb 18, 2012 5:25 pm

ditto saddlepoint.
Last edited by ABQ4804 on Sat May 05, 2018 12:12 am, edited 1 time in total.

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by saddle point » Sat Feb 18, 2012 5:27 pm

tfb wrote:
saddle point wrote:Data point: my paper bonds came in the mail today. I followed the instructions at http://thefinancebuff.com/backdoor-to-p ... bonds.html to the letter.
Success! So glad it worked out. Did you also purchase electronic bonds to the $10k per person limit in TreasuryDirect?
Planning to later in the year. I guess we'll see what happens.

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by DavidC » Sat Mar 03, 2012 4:08 pm

Timeline:
  1. January 3rd -> drops off January 2012 estimated tax payment at the post office
  2. January 11th -> estimated tax payment is cashed by the Treasury
  3. February 2nd or 3rd (I don't remember which) -> drops off 2011 income tax forms at the post office (yes, I have simple taxes :wink: )
  4. February 24th -> Receives remainder of tax refund via direct deposit
  5. February 27th -> Date printed on paper savings bonds
  6. March 3rd -> Receives February 2012 paper I savings bonds in the mail (yay Saturday delivery!)
Obviously this would have been faster if I had e-filed my taxes.

I had been previously warned by someone, probably sscritic, that I would not receive one $5000 bond. But what I did receive was kind of odd to me... although on the plus side this now means I have every paper I series denomination except for the $75, $100 and $10000:
  • four $1000 Albert Einsteins (Henry Paulson signature)
  • one $500 George Marshall (Timothy Geithner signature)
  • one $200 Chief Joseph (Henry Paulson signature)
  • six :shock: $50 Helen Kellers (Timothy Geithner signature)
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by sscritic » Sat Mar 03, 2012 4:16 pm

DavidC wrote: I had been previously warned by someone, probably sscritic, that I would not receive one $5000 bond. But what I did receive was kind of odd to me... although on the plus side this now means I have every paper I series denomination except for the $75, $100 and $10000:
  • four $1000 Albert Einsteins (Henry Paulson signature)
  • one $500 George Marshall (Timothy Geither signature)
  • one $200 Chief Joseph (Henry Paulson signature)
  • six :shock: $50 Helen Kellers (Timothy Geither signature)
Thanks, but I don't think I can take credit for "warning" you. It sounds like you have a great collection of bonds (I was a big Chief Joseph fan as a kid).

Congrats.

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by tfb » Sat Mar 03, 2012 6:25 pm

DavidC wrote:But what I did receive was kind of odd to me... although on the plus side this now means I have every paper I series denomination except for the $75, $100 and $10000
That's how they said they would do it. The first $250 in five $50 bonds. The rest in the least number of bonds. Still waiting for a positive confirmation the paper bonds don't take off your quota for electronic bonds. Did you buy $10k electronic bonds before these paper bonds were issued?
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by DavidC » Sat Mar 03, 2012 7:48 pm

tfb wrote:Still waiting for a positive confirmation the paper bonds don't take off your quota for electronic bonds.
(Edit: It seems you have seen the press release, I forgot you blogged about this, David == Dumb :( ) There is of course the press release announcing the increased limits:
With today's announcement, the total amount an individual can purchase in online savings bonds in one calendar year is $20,000. An investor still can purchase up to $5,000 annually in Series I paper savings bonds using his/her tax refund and IRS Form 8888.
I can also point out that the limits for purchasing paper and electronic bonds have always been separate. None of the changes in the underlying regulations have suddenly linked the two limits together although that may not satisfy you since the regulations don't take into account the purchase of paper I savings bonds purchased via tax refund. I guess if that is not enough then you could always ask the Treasury...
tfb wrote:Did you buy $10k electronic bonds before these paper bonds were issued?
My $10K electronic I savings bonds were purchased on February 28th, so I suppose that technically means they were purchased after the paper bonds (by a day or so).
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by sscritic » Sat Mar 03, 2012 7:59 pm

DavidC wrote: I can also point out that the limits for purchasing paper and electronic bonds have always been separate. None of the changes in the underlying regulations have suddenly linked the two limits together although that may not satisfy you since the regulations don't take into account the purchase of paper I savings bonds purchased via tax refund.
I am with you. I believe the CFR* when it says you can buy $10,000 in book-entry bonds of either series at TD. It doesn't matter if you also buy paper airplanes or paper bonds with a tax refund. Since paper bonds are not book-entry bonds, your paper bond purchases have nothing to do with the limits on your book-entry bond purchases and vice-versa.

*Except when it lies and says the Treasury will no longer issue paper bonds after 1/1/2012. :)

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by tfb » Sat Mar 03, 2012 8:15 pm

DavidC wrote:I can also point out that the limits for purchasing paper and electronic bonds have always been separate. None of the changes in the underlying regulations have suddenly linked the two limits together although that may not satisfy you since the regulations don't take into account the purchase of paper I savings bonds purchased via tax refund. I guess if that is not enough then you could always ask the Treasury...
I believed that's the case, although the "can still" verbiage in the press release is a little vague. IIRC there is some language in Form 8888 instructions about issuing the bonds electronically and then immediately reissuing them. I missed the discussion on the regs. It's always good to get a confirmation in the real world.
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by DavidC » Sat Mar 03, 2012 8:51 pm

sscritic wrote:*Except when it lies and says the Treasury will no longer issue paper bonds after 1/1/2012. :)
I know I know... I don't like how they wrote the updated regulations. They changed everything to say basically "nope we don't sell those anymore" but add to the very beginning of the document a "Supplementary Information" note that basically says "we don't sell them any more but you can still get them through your tax refund" :? . It would definitely be better if the actual regulations (as opposed to a note) literally spelled out the option to obtain the bonds via refund...
tfb wrote:IIRC there is some language in Form 8888 instructions about issuing the bonds electronically and then immediately reissuing them.
It should be noted that process is only invoked if you use lines 5 and/or 6 which allow the issue of bonds to someone other than you (and spouse if MFJ). My hunch (unconfirmed!) is that this process is used so that initially your refund is issued to you (and your spouse if MFJ) since the refund is meant for you (and spouse if MFJ): then they reissue the bond with the requested registration details from lines 5 and/or 6. Note that if you request your bonds via line 4 this two-step process does not occur since the bonds will ultimately be registered in the names of the person (or persons if MFJ) filing the tax return.

For the record, I requested my refund via line 5 because I wanted to add my sibling as a beneficiary so my bonds went through that two-step process. The actual text is below:
If you complete line 5 or 6, you are consenting to have the bonds issued using the following two-step process.
  1. The bonds will be issued in electronic form in your name (and your spouse’s name if filing jointly). You will not receive these bonds or any notice regarding this part of the process.
  2. The bonds will be immediately reissued in the names you have requested and mailed to you.
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Re: Paper I bonds WILL be available via tax refund in 2012

Post by sscritic » Sat Mar 03, 2012 9:37 pm

DavidC wrote: I know I know... I don't like how they wrote the updated regulations. They changed everything to say basically "nope we don't sell those anymore" but add to the very beginning of the document a "Supplementary Information" note that basically says "we don't sell them any more but you can still get them through your tax refund" :? . It would definitely be better if the actual regulations (as opposed to a note) literally spelled out the option to obtain the bonds via refund...
But as you say, even the supplementary note contradicts itself, all in one paragraph. It basically says we don't sell paper bonds anymore, except when we sell paper bonds.
Although no new paper savings bonds will be issued after the effective date, this change does not impact the ability to hold or redeem existing paper bonds. Individuals will also be able to obtain paper Series I savings bonds with their tax refunds through Internal Revenue Service Form 8888.
I guess the bonds you get with your tax refund are unissued bonds as opposed to issued bonds.

Nope, that's not it. I just figured it out. You are not getting "new paper savings bonds"; you are getting some of their left over inventory of old bonds that they are clearing out. :)

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by saddle point » Sun Mar 04, 2012 11:11 am

Crap, I used line 5 :(. I was able to schedule a 10k electronic purchase for the end of April after the paper arrived, though. I'll post an update when that executes.

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by DavidC » Sun Mar 04, 2012 4:59 pm

saddle point wrote:Crap, I used line 5 :(.
No crap... no worries, you're fine. The worst case scenario is that, if you could have used line 4 instead (registered the bonds in the name(s) on the tax form), you made the Treasury perform some extra work to create your paper bonds.
DavidC wrote:For the record, I requested my refund via line 5 because I wanted to add my sibling as a beneficiary so my bonds went through that two-step process.
In true boglehead fashion my chief concern is saving enough to withstand 7 consecutive biblical plagues. - TheNightsToCome

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by saddle point » Sun Mar 04, 2012 7:14 pm

DavidC wrote:
saddle point wrote:Crap, I used line 5 :(.
No crap... no worries, you're fine. The worst case scenario is that, if you could have used line 4 instead (registered the bonds in the name(s) on the tax form), you made the Treasury perform some extra work to create your paper bonds.
I guess I'm a pessimist and worry that maybe, the brief electronic instantiation of my bonds makes them count against my electronic purchase limit (why the heck else would they tell me the details in the fine print I didn't read?). I guess I'll find out in April.

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by DavidC » Sun Mar 04, 2012 9:01 pm

saddle point wrote:I guess I'm a pessimist and worry that maybe, the brief electronic instantiation of my bonds makes them count against my electronic purchase limit (why the heck else would they tell me the details in the fine print I didn't read?). I guess I'll find out in April.
I can certainly understand being a pessimist... but let me try to actually explain why I don't see this as a problem (I suppose I should have did this in my first reply :x)
  1. My first point would be that this problem simply cannot occur if the definitive (paper) bonds are purchased via refund before the book-entry (electronic) bonds: the temporary "electronic form" bond will be long gone by the time the real book-entry (electronic) bonds are purchased. In my case my book-entry (electronic) bonds were purchased at least a day after the definitive (paper) bonds, so your situation will be similar except for the fact that your time gap will be larger (about a month versus a day).
  2. My second point, however, will hopefully prove that even those who reverse the purchase order ($10K book-entry (electronic) bonds first, $5K definitive (paper) bonds second) have nothing to fear. Assume for the moment that the "electronic form" the IRS refers to literally issuing a temporary but real book-entry (electronic) I savings bond in your name (hint: this assumption may not be true and "electronic form" could refer to something else... such as entering the bond registration in a Word document :twisted:). Even in this case you're still clear because:
    § 363.52 What is the principal amount of book-entry Series EE and Series I savings bonds that I may acquire in one year?
    1. The principal amount of book-entry savings bonds that you may acquire in any calendar year is limited to $10,000 for Series EE savings bonds and $10,000 for Series I savings bonds.
    2. Bonds purchased or transferred as gifts will be included in the computation of this limit for the account of the recipient for the year in which the bonds are delivered to the recipient. (emphasis added by David)
    3. Bonds purchased as gifts or in a fiduciary capacity are not included in the computation for the purchaser. Bonds received due to the death of the registered owner are not included in the computation for the recipient.
    4. We reserve the right to take any action we deem necessary to adjust the excess, including the right to remove the excess bonds from your TreasuryDirect account and refund the payment price to your bank account of record using the ACH method of payment.
    In another words, unless they literally look up your Treasury Direct account and place this temporary bond in your TD account, the temporary bond would not count against your annual purchase limit. Since IRS form 8888 plainly says that "You will not receive these bonds" there is no reason to believe they would actually search for let alone try to place this temporary bond in your TD account (and remember... this process also needs to work for taxpayers without TD accounts).
In true boglehead fashion my chief concern is saving enough to withstand 7 consecutive biblical plagues. - TheNightsToCome

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by Flobes » Wed Mar 07, 2012 5:28 pm

I efiled today. (Fillable Forms, after pencil and paper computation of all forms and taxes)

My Form 8888 requests part of refund allocation to be $5,000 IBond.

I already purchased my $10,000 annual allotment from Treasury Direct in January 2012.

I'll keep y'all posted about whatever happens next.

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by neurosphere » Wed Mar 07, 2012 6:36 pm

DavidC wrote: [*]four $1000 Albert Einsteins (Henry Paulson signature)
[*]one $500 George Marshall (Timothy Geithner signature)
[*]one $200 Chief Joseph (Henry Paulson signature)
[*]six :shock: $50 Helen Kellers (Timothy Geithner signature) [/list]
I received the same mix two days ago. The next day, they were in the mail to Treasury Direct to be added to my collection of online "converted" bonds. while I find the TD site a tad cumbersome, I'm used to it now so I don't mind it.

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Re: Paper I bonds WILL be available via tax refund in 2012

Post by VictoriaF » Wed Mar 07, 2012 8:50 pm

Flobes wrote:I efiled today. (Fillable Forms, after pencil and paper computation of all forms and taxes)

My Form 8888 requests part of refund allocation to be $5,000 IBond.

I already purchased my $10,000 annual allotment from Treasury Direct in January 2012.

I'll keep y'all posted about whatever happens next.
Did you overpay your taxes by filing estimated taxes or in some other way?

Victoria
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