The I Bond Thread

[Sunset]

...
You're not responsible for lost money with tax ID fraud if you report it, are you? It's a huge hassle, but in the end you won't be out an extra $5K because you had sent it in, right?

....

A person would not be responsible to the same extent that taxes paid through the year are subject to fraud claims, doesn't matter if it's estimated taxes or pre-paid taxes.

Besides, a fraudster does not limit themselves to the taxes paid, they claim extra taxes were paid and lots of deductions like children to net a much higher payout.

 

[steelyman]

I Bond rate 11/2021

There is a good discussion on this question in the following

https://tipswatch.com/2022/01/04/i-bonds-a-very-simple-buying-guide-for-2022/

Good article, thanks for posting. I’ll take the “long term investor” approach described and possibly wait until November to finish 2022 purchase.

The foregone interest on a new purchase isn’t enough to make me hurl myself out the window like the fat cats in 1929. All my other I Bonds are earning the current nice rates.

 

[pb4uski]

I think after January 18 you can still make a payment applicable to 2021, but it is too late to address Q4 estimated taxes is all-not particularly an issue here.

So it sounds like you are saying that my scheme would work?

If I can't do it via EFTPS then I could always mail them an estimated payment check and wait until the check clears my bank before e-filing my return. I'm guessing that despite them being behind in processing that depositing checks is probably higher on their list of priorities.

 

[Montecfo]

So it sounds like you are saying that my scheme would work?

If I can't do it via EFTPS then I could always mail them an estimated payment check and wait until the check clears my bank before e-filing my return. I'm guessing that despite them being behind in processing that depositing checks is probably higher on their list of priorities.

I would think so. My thought was to mail them an "extension payment" then file the return. I only thought this since i have not so far needed to do estimated tax payments.

IRS cash window is always open...for inbound cash.

 

[LarryMelman]

.6% print today. So halfway through next IBond cycle its 2.3% with 3 to go.

I don't know what a "print" is. And the number is wrong.

The CPI-U announced in mid-October was 274.310. Today's number is 278.802 which is 1.637% higher. If the CPI-U was unchanged from now till the April announcement, then the next inflation-based rate would be double that or 3.275%.

This can be found in the monthly press release here. Ignore the "seasonal adjustment" blather, you want the raw CPI-U number.

Not seasonally adjusted CPI measures

The Consumer Price Index for All Urban Consumers (CPI-U) increased 7.0 percent over the last 12 months to an index level of 278.802 (1982-84=100). For the month, the index increased 0.3 percent prior to seasonal adjustment.

 

[tulak]

I would think so. My thought was to mail them an "extension payment" then file the return. I only thought this since i have not so far needed to do estimated tax payments.



IRS cash window is always open...for inbound cash.

This is what I have to do, since I don’t make estimated payments.

The following article might be helpful, describing both options and how they are handled when filing: https://thefinancebuff.com/overpay-taxes-buy-i-bonds-better-than-tips.html

I know it clarified some questions I had. I debated if the 5k in paper bonds is worth the hassle, but I’m curious enough about the process to give it a try. It also has a bigger impact for me, since I can only contribute 10k/year.

 

[Mulligan]

I Bond rate 11/2021

1. The CPI-U for December was 0.5%. The 0.6% value excludes food and energy.
2. It's not as simple as adding the monthly percentages together.

Start with September CPI-U index value = 274.310
The December value released this morning = 278.802

278.802-274.310=4.492
4.492/274.310=0.0164 or 1.64% for 3 months.

Thanks for correcting my bad math. So annualized that is 3.28% presently so its heading for another good one!
Looks like this website did the tracking, so maybe they will again next month, so I dont have to do anymore bad math, ha!

https://keilfp.com/blogpodcast/i-bond-rate-november-2021-to-april-2022/

 

[pb4uski]

tulak.... excellent article by Harry Sit. Thanks for the post.

 

[Gearhead Jim]

I'm still confused about one aspect of purchase limits:

During the first three weeks of 2022, my wife and I each bought 10k worth of iBonds through Treasury Direct in our individual TD accounts, total 20k.

When we file our income tax return in a couple of weeks, we will have over 5k of refund coming, we plan to buy 5k paper bonds with that.

If we form some sort of trust or other entity, will that allow us to buy another 10k of iBonds above the 25k that we will have already purchased this year? Or will we be maxed out at 25k in all accounts?

Thanks for the help.

 

[Sunset]

I'm still confused about one aspect of purchase limits:

During the first three weeks of 2022, my wife and I each bought 10k worth of iBonds through Treasury Direct in our individual TD accounts, total 20k.

When we file our income tax return in a couple of weeks, we will have over 5k of refund coming, we plan to buy 5k paper bonds with that.

If we form some sort of trust or other entity, will that allow us to buy another 10k of iBonds above the 25k that we will have already purchased this year? Or will we be maxed out at 25k in all accounts?

Thanks for the help.

If you form a trust or are self employed proprietorship, then you can set up an account for the trust or proprietorship and it qualifies to buy $10K per year. These are called Entity ownership.

I did it for my proprietorship, which uses my SSN and my bank account, so it was a little weird filling it out, as the SSN and bank account, and address are the same as mine.
However it works and I've noticed the entity cannot have a POD , as entities don't die.

I didn't bother to form a trust as here in IL it's not cheap, so it wasn't worth it.

 

[Gearhead Jim]

^^^
Thanks.

"However it works and I've noticed the entity cannot have a POD , as entities don't die."
That's very kind of the government- DW and I can form an entity and we'll live forever!


Getting realistic, we too live in Illinois and it sounds like a trust would not be worthwhile for us.
I presume we would actually have to do some kind of business to have a proprietorship?

 

[pb4uski]

If you form a trust or are self employed proprietorship, then you can set up an account for the trust or proprietorship and it qualifies to buy $10K per year. These are called Entity ownership.



I did it for my proprietorship, which uses my SSN and my bank account, so it was a little weird filling it out, as the SSN and bank account, and address are the same as mine.

However it works and I've noticed the entity cannot have a POD , as entities don't die.



I didn't bother to form a trust as here in IL it's not cheap, so it wasn't worth it.

If a sole proprietorship's sole proprietor dies, I think the some proprietorship also dies... one and the same.

 

[Gill]

I'm still confused about one aspect of purchase limits:

During the first three weeks of 2022, my wife and I each bought 10k worth of iBonds through Treasury Direct in our individual TD accounts, total 20k.

When we file our income tax return in a couple of weeks, we will have over 5k of refund coming, we plan to buy 5k paper bonds with that.

If we form some sort of trust or other entity, will that allow us to buy another 10k of iBonds above the 25k that we will have already purchased this year? Or will we be maxed out at 25k in all accounts?

Thanks for the help.

Yes, a trust will enable you to purchase an additional $10k of bonds.
Gill

 

[USGrant1962]

I bought my 2022 allotment today.

I'm curious, do most people consider iBonds as cash or as a bond in looking at AA? I, for example, have them down as bonds in Personal Capital but thinking about calling them cash. I know it doesn't really matter, just a label and both are fixed income.

 

[aja8888]

I bought my 2022 allotment today.

I'm curious, do most people consider iBonds as cash or as a bond in looking at AA? I, for example, have them down as bonds in Personal Capital but thinking about calling them cash. I know it doesn't really matter, just a label and both are fixed income.

I call them bonds in my AA. Cash is something I can easily do something with...like spend it or invest it.

 

[Sunset]

If a sole proprietorship's sole proprietor dies, I think the some proprietorship also dies... one and the same.

Makes sense, yet TreasuryDirect treats it just like the other entities.

Myself, I will cash in these proprietorship held bonds first and hopefully before I die, so it's not confusing/awkward for my heirs.

 

[daver]

I bought my 2022 allotment today.

I'm curious, do most people consider iBonds as cash or as a bond in looking at AA? I, for example, have them down as bonds in Personal Capital but thinking about calling them cash. I know it doesn't really matter, just a label and both are fixed income.

I always thought of my work place 401Ks stable value fund as cash but Fido who is now the custodian labels that same fund as bonds.

 

[Fermion]

Looks like the inflation numbers came out much higher than expected for December? I am thinking the next I-bond rate will not be zero lol.

 

[Gill]

Looks like the inflation numbers came out much higher than expected for December? I am thinking the next I-bond rate will not be zero lol.

If you mean the fixed rate, it will almost certainly be zero. The Treasury has no incentive to raise it with the bonds flying off the shelf.
Gill

 

[Fermion]

If you mean the fixed rate, it will almost certainly be zero. The Treasury has no incentive to raise it with the bonds flying off the shelf.
Gill

No, I mean the inflation adjustment portion. Some were figuring worst case scenario that the adjustment was zero in May.

 

[Dreamer]

I bought our 2022 allotment on 1/25/22.

 

[Gumby]

Based on today's CPI release, I'm predicting the next reset rate will be 6.54%. Still a great deal.

 

[Magus]

Based on today's CPI release, I'm predicting the next reset rate will be 6.54%. Still a great deal.

Indeed - what does that assume for CPI the next couple months before they lock it?

 

[Gumby]

That assumes .4% monthly inflation for each of March and April (which would be about 4.9% annual rate). I suppose inflation could taper more sharply, but 2/3 of the next I-Bond rate is already baked in. Even if we had zero inflation over the course of February and March, it would still be a 4.99% annual rate.

 

[Magus]

That assumes .5% monthly inflation for each of March and April. I suppose inflation could taper more sharply, but 2/3 of the next I-Bond rate is already baked in. Even if we had zero inflation over the course of February and March, it would still be a 4.99% annual rate.

Seems reasonable, thank you! (I doubt inflation will taper sharply)