Can I buy iBonds electronically with a tax refund?

[Midpack]

Unfortunately I am going to get a tax refund for 2012. However, it appears I can buy more than the otherwise $10K iBond limit with my tax refund, so maybe I've out dumbed myself (again).

I'd rather have the iBonds added to my Treasury Direct account, and I've read they discontinued paper bonds in 2010-11. But everything I read at the TD and TurboTax sites still seems to say they will send paper bonds, I'd prefer electronic.

So I'm confused. Anyone know for sure?

 

[rbmrtn]

as I understand it, the ones purchased with tax refunds are paper, everything else is electronic.

Individual - Buying I Bonds

And the paper ones can be converted to electronic thru treasurydirect.

 

[Mulligan]

All I have ever read is the $5k limit on tax refunds and they have to be given in the paper variety only, which you could then convert.

 

[Midpack]

At least I can convert them from paper to electronic...though I wonder why the extra step(s). No reply necessary...

 

[Dimsumkid]

Yes, you get paper bonds. I was in the same situation last yr. I got the max $5k bonds thru tax return using Turbotax. It was kind of a headache to get Turbotax to allow me to pay the extra needed on my return to get to $5k. I had to fill out an extension, even though I filed on time and had to move the numbers around to force the payment. The I bonds were at the new, lower rate (May 2012) which was disappointing and they sent me as many small denomination bonds as possible in multiple mailings too.

 

[4legsgood]

Yes, you get paper bonds. I was in the same situation last yr. I got the max $5k bonds thru tax return using Turbotax. It was kind of a headache to get Turbotax to allow me to pay the extra needed on my return to get to $5k. I had to fill out an extension, even though I filed on time and had to move the numbers around to force the payment. The I bonds were at the new, lower rate (May 2012) which was disappointing and they sent me as many small denomination bonds as possible in multiple mailings too.

I quoted the above post to underline that putting a tax refund into ibonds probably won't get the amazing rate, but the May rate.

For those that want to it sure looks to me like there's a way of getting tax refund into electronic ibonds instead of paper (to go over the 10k limit). That contradicts everything I've read on various blogs so I feel like I'm misunderstanding. I would like to hear if anyone's done this successfully.

https://www.treasurydirect.gov/indiv/research/articles/res_invest_articles_tax_refund_1208.htm

"Do you know you can have your tax refund directed to your TreasuryDirect account to use for Treasury security purchases?

TreasuryDirect offers flexible options for all your security purchases. One option to fund your account is to use your tax refund.

You can request the IRS or your state tax department to deposit your tax return directly into your TreasuryDirect account where you can use the funds to purchase savings bonds or marketable Treasury securities. All you need to do is provide TreasuryDirect's routing number and your TreasuryDirect account number in the refund instructions on your tax return.

On your tax return, enter:

the TreasuryDirect routing number, 051736158, in the “Routing number” field.
your TreasuryDirect account number in the “Account number” field.
“Savings” as the account type.
Providing these instructions in the “refund” area on your tax return will direct your refund to the Zero-Percent C of I in your TreasuryDirect account where it will be available to fund the purchase of one or more Treasury securities.

You can also use your refund to purchase Series I savings bonds in paper form."

 

[Out-to-Lunch]

I quoted the above post to underline that putting a tax refund into ibonds probably won't get the amazing rate, but the May rate.

For those that want to it sure looks to me like there's a way of getting tax refund into electronic ibonds instead of paper (to go over the 10k limit). That contradicts everything I've read on various blogs so I feel like I'm misunderstanding. I would like to hear if anyone's done this successfully.

https://www.treasurydirect.gov/indiv/research/articles/res_invest_articles_tax_refund_1208.htm

"Do you know you can have your tax refund directed to your TreasuryDirect account to use for Treasury security purchases?

TreasuryDirect offers flexible options for all your security purchases. One option to fund your account is to use your tax refund.

You can request the IRS or your state tax department to deposit your tax return directly into your TreasuryDirect account where you can use the funds to purchase savings bonds or marketable Treasury securities. All you need to do is provide TreasuryDirect's routing number and your TreasuryDirect account number in the refund instructions on your tax return.

On your tax return, enter:

the TreasuryDirect routing number, 051736158, in the “Routing number” field.
your TreasuryDirect account number in the “Account number” field.
“Savings” as the account type.
Providing these instructions in the “refund” area on your tax return will direct your refund to the Zero-Percent C of I in your TreasuryDirect account where it will be available to fund the purchase of one or more Treasury securities.

You can also use your refund to purchase Series I savings bonds in paper form."

I am no expert on this, but it appears to me that the procedure you quoted gets the tax refund into your TreasuryDirect account, but not provide a way to go over the limit in electronic bonds. The verbiage on that page says you can use those funds to make eligible purchases. I believe what you are proposing are NOT eligible purchases.

 

[lucky penny]

I quoted the above post to underline that putting a tax refund into ibonds probably won't get the amazing rate, but the May rate.

For those that want to it sure looks to me like there's a way of getting tax refund into electronic ibonds instead of paper (to go over the 10k limit). That contradicts everything I've read on various blogs so I feel like I'm misunderstanding. I would like to hear if anyone's done this successfully.

https://www.treasurydirect.gov/indiv/research/articles/res_invest_articles_tax_refund_1208.htm

"Do you know you can have your tax refund directed to your TreasuryDirect account to use for Treasury security purchases?

TreasuryDirect offers flexible options for all your security purchases. One option to fund your account is to use your tax refund.

You can request the IRS or your state tax department to deposit your tax return directly into your TreasuryDirect account where you can use the funds to purchase savings bonds or marketable Treasury securities. All you need to do is provide TreasuryDirect's routing number and your TreasuryDirect account number in the refund instructions on your tax return.

On your tax return, enter:

the TreasuryDirect routing number, 051736158, in the “Routing number” field.
your TreasuryDirect account number in the “Account number” field.
“Savings” as the account type.
Providing these instructions in the “refund” area on your tax return will direct your refund to the Zero-Percent C of I in your TreasuryDirect account where it will be available to fund the purchase of one or more Treasury securities.

You can also use your refund to purchase Series I savings bonds in paper form."

I have done this on numerous occasions when I'm due a refund, up to the maximum of $5000 a year. They send you paper bonds. My only complaint is that what you get will include many bonds in small denominations, rather than the fewest number of bonds in larger denominations, though I believe you can then convert the bonds to electronic securities. The $5000 maximum is in addition to the annual limit on purchases through Treasury Direct.

From Treasury Direct's website:

"How much in I bonds can I buy for myself?

In a calendar year, you can acquire:

up to $10,000 in electronic I bonds in TreasuryDirect
up to $5,000 in paper I bonds using your federal income tax refund

The limits apply separately, meaning you could acquire up to $15,000 in I bonds in a calendar year."

 

[4legsgood]

I have done this on numerous occasions when I'm due a refund, up to the maximum of $5000 a year. The $5000 maximum is in addition to the amount you can purchase annually from Treasury Direct. My only complaint is that what you get will include many bonds in small denominations, rather than the fewest number of bonds in larger denominations.

I'm talking about getting electronic bonds, not paper.

 

[RetiredHappy]

I have done this on numerous occasions when I'm due a refund, up to the maximum of $5000 a year. The $5000 maximum is in addition to the amount you can purchase annually from Treasury Direct. My only complaint is that what you get will include many bonds in small denominations, rather than the fewest number of bonds in larger denominations, though you can then convert the bonds to electronic securities.

Were these refunds issued as paper bonds or electronically into TreasuryDirect?

 

[lucky penny]

Were these refunds issued as paper bonds or electronically into TreasuryDirect?

Only paper bonds, though I believe you can then convert them to electronic securities. (I edited my initial post above.)

 

[4legsgood]

I am no expert on this, but it appears to me that the procedure you quoted gets the tax refund into your TreasuryDirect account, but not provide a way to go over the limit in electronic bonds. The verbage on that page says you can use those funds to make eligible purchases. I believe what you are proposing are NOT eligible purchases.

Below excerpt kind of associates the $5000 with a deposit first to TreasuryDirect. But not conclusive! Oh well, thanks for replying.

https://www.irs.gov/refunds/now-you...savings-bonds-for-anyone-with-your-tax-refund

"Buying savings bonds with your tax refund is simple and easy
Just tell your tax preparer you want to buy savings bonds with part or all of your refund! If you prepare your own return using tax software, the computer program will guide you. If you file a paper return, use Form 8888, Allocation of Refund (Including Bond Purchases) PDF. The instructions explain what you need to do.

In any single calendar year, you can purchase up to $5,000 of I bonds under this program. If you purchase bonds with your tax refund, the amount you request must be divisible by $50. If you don’t buy I bonds with 100 percent of your refund, you can elect to have the remaining amount not used to purchase bonds be deposited into a bank account, your TreasuryDirect account, or mailed to you as a check. For example, if your refund is $280, you can direct $250 to I bonds and the $30 balance to your savings account or request a check by mail. The choice is yours!"

https://www.irs.gov/refunds/now-you...savings-bonds-for-anyone-with-your-tax-refund

 

[4legsgood]

Only paper bonds, though I believe you can then convert them to electronic securities. (I edited my initial post above.)

I can't stand paper bonds after going through the rigamarole of converting many! Thanks for replying.

 

[lucky penny]

I can't stand paper bonds after going through the rigamarole of converting many! Thanks for replying.

You're welcome. I have a pile of those bonds in small denominations that I intend to move to my TD account -- one of these days.

 

[Mulligan]

You're welcome. I have a pile of those bonds in small denominations that I intend to move to my TD account -- one of these days.

You can also buy an additional 10k annually if you have a revokable trust.

https://thefinancebuff.com/buy-more-i-bonds-treasury-direct-trust.html