When rates were higher, I bought $10k for me and my wife bought $10k and we got $5k with tax refund and each bought $10k of gift bonds that will be gifted to each other when rates go down and we won’t be buying up to our own limit. I also bought $10k in my trust for a total of $55k.
How about this fact pattern. Married couple filing jointly with a refund of say $13,000. In calendar 2022 they each bought $10,000 of I Bonds through Treasury Direct. In early calendar 2023 they are filing their federal income tax return and want to maximize the portion of the refund that is allocated to I Bond purchases. The question is what amount of refund can they direct to I Bond purchases? Logic, which frequently does not prevail for federal income tax, suggests the answer is $10,000, $5,000 for each of them. Seemingly they would request that through IRS Form 888. By that means they would request an electronic deposit to their checking account (there are alternatives) of $3,000 and $5,000 for each of them in I Bonds. Will that produce the desired result? What do you think? By the way this is my real tax pattern and that's how I prepared my income tax return including Form 8888. I'll let you know what happens.
Based on how it reads on the IRS website I think you're correct and should be able to purchase $5k each, but I'm not really sure. If you have an accountant prepare your taxes, I'd talk to them about it...or try to find a tax accountant that might know the answer.
If I buy $10k of iBonds today will I at least be guaranteeed to have that $10K in 5 years with no penalty? Also the interest rate fluctuates per inflation correct? Like I am not guranteed the inflation rate of the date I buy correct?
You can never lose your principal amount. You'll get 6 months worth of the current interest rate, no matter when in the period you buy. Then 6 months of whatever the rate changes to in May, and so on... Right now I bonds also have a 0.4% fixed rate, so you'll also earn that on top of the rate that changes with inflation for the life of your Ibond
Tfs! Interested in buying ibonds in April. Question, if I buy ibonds in April and the rate is higher for May, how can I get the higher rate? Thanks in advance
If you buy in April your first 6 months of interest will be paid at that interest rate. Whatever the rate changes to in May will be what you receive for the following 6 months of interest. So once you buy I-bonds you'll always get 6 months worth of any future rate changes...you just might be "off schedule" on when you're earning it based on when during the cycle you buy.
Hi Jay. This is a GREAT video. Very smart and very helpful. Super cool. Are all these "tricks" (via LLC, a Trust ...) - is that also applicable for EE series bonds or only for I Bonds ? Thanks ! Great channel.
I opened a new account with treasury direct and funded. After funding the account, it is locked. When I tried to login, says error contact a telephone number , not asked security question or password. How can I get my money back?
Hey man I’m alittle confused can you help out if I would to buy now i bonds would I be getting that 9.62% for 6 months or will it be whatever interest it’s going to be fixed on nov 1st
The rate will change to 6.48% on Nov. 1 but any Ibonds bought while it’s still 9.62% will earn a combined 8.5% for the first year….6mos @ 9.62% + 6mos @ 6.48%
Thank you , I bought 10k and my wife bought 10 k can we also buy 10k for each other as a gift the same calendar year? Your response will be appreciated
Unfortunately not. Any amount of I-bonds you gift to someone count towards their $10k limit for the year. So if you've already each maxed that out you can't go beyond it through gifting.
You can buy them as a gift but you cannot give them during the year you already purchased your $10K limit. Me and my spouse bought an additional $20K each and we will hold them and gift them to each other in the next calendar year we do not buy any individually.
Jay, if I bought a new Stern Pinball machine for $10K, instead of ibonds, would I get a better return on my pinball machine if I sold it in 5 years, than if I bought and sold ibonds in those 5 years?
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When rates were higher, I bought $10k for me and my wife bought $10k and we got $5k with tax refund and each bought $10k of gift bonds that will be gifted to each other when rates go down and we won’t be buying up to our own limit. I also bought $10k in my trust for a total of $55k.
Where were you when I bought my I-bonds? I already bought 10k in March
I was here! The question is, where were you?!
@@JayFairbrother touche. Well played.
I have a Trust that has three LLCs in it. Does mean I can buy an additional 40, 30, or only 10k?
Can i add my friend who is not usa citizen but works, lives in usa as beneficiary for treasury direct ibonds?
Your wrong, you do not get any interest on an I bond in the month you sell.
What about POD, joint ownership, and beneficiary info?
Hi, Thanks for the video. How can I cash out my I-Bond ?
You can cash it out right through Treasury Direct as long as you’ve held it for at least 12 months already
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How about this fact pattern. Married couple filing jointly with a refund of say $13,000. In calendar 2022 they each bought $10,000 of I Bonds through Treasury Direct. In early calendar 2023 they are filing their federal income tax return and want to maximize the portion of the refund that is allocated to I Bond purchases. The question is what amount of refund can they direct to I Bond purchases?
Logic, which frequently does not prevail for federal income tax, suggests the answer is $10,000, $5,000 for each of them. Seemingly they would request that through IRS Form 888. By that means they would request an electronic deposit to their checking account (there are alternatives) of $3,000 and $5,000 for each of them in I Bonds. Will that produce the desired result?
What do you think? By the way this is my real tax pattern and that's how I prepared my income tax return including Form 8888. I'll let you know what happens.
Based on how it reads on the IRS website I think you're correct and should be able to purchase $5k each, but I'm not really sure. If you have an accountant prepare your taxes, I'd talk to them about it...or try to find a tax accountant that might know the answer.
The limit is $5,000 per tax return.
If I buy $10k of iBonds today will I at least be guaranteeed to have that $10K in 5 years with no penalty? Also the interest rate fluctuates per inflation correct? Like I am not guranteed the inflation rate of the date I buy correct?
You can never lose your principal amount. You'll get 6 months worth of the current interest rate, no matter when in the period you buy. Then 6 months of whatever the rate changes to in May, and so on...
Right now I bonds also have a 0.4% fixed rate, so you'll also earn that on top of the rate that changes with inflation for the life of your Ibond
Tfs! Interested in buying ibonds in April. Question, if I buy ibonds in April and the rate is higher for May, how can I get the higher rate? Thanks in advance
If you buy in April your first 6 months of interest will be paid at that interest rate. Whatever the rate changes to in May will be what you receive for the following 6 months of interest. So once you buy I-bonds you'll always get 6 months worth of any future rate changes...you just might be "off schedule" on when you're earning it based on when during the cycle you buy.
Is it better to cash them out after 12 months, or leave it in ? Any implications if you dont cash out after 12 months?
Its better to hold them longer than 12 months. If you cash out prior to 5 years you forefit the last 3 months of interest earned
Hi Jay. This is a GREAT video. Very smart and very helpful. Super cool. Are all these "tricks" (via LLC, a Trust ...) - is that also applicable for EE series bonds or only for I Bonds ? Thanks ! Great channel.
Thanks for the support! Yes, all the same entities that can buy I-bonds can also buy series EE bonds as well.
I opened a new account with treasury direct and funded. After funding the account, it is locked. When I tried to login, says error contact a telephone number , not asked security question or password. How can I get my money back?
Did you call the phone number they told you to call? Seems like the place to start...
Hold my beer, calling Janet Yellen to let her know you’re exposing this info! Have her on speed dial
Psshhhh, Janet and I go way back. She’s cool with it!
Hey man I’m alittle confused can you help out if I would to buy now i bonds would I be getting that 9.62% for 6 months or will it be whatever interest it’s going to be fixed on nov 1st
You'll get the 9.62 interest if you buy them before Oct 28. It takes one or two days to settle.
What if I buy them on the 28th
The website wasn’t working
Any idea on the semi annual interest rate coming in November? I’m seeing predictions between 6.5% to 8.5%
The rate will change to 6.48% on Nov. 1 but any Ibonds bought while it’s still 9.62% will earn a combined 8.5% for the first year….6mos @ 9.62% + 6mos @ 6.48%
Thank you , I bought 10k and my wife bought 10 k can we also buy 10k for each other as a gift the same calendar year? Your response will be appreciated
Unfortunately not. Any amount of I-bonds you gift to someone count towards their $10k limit for the year. So if you've already each maxed that out you can't go beyond it through gifting.
You can buy them as a gift but you cannot give them during the year you already purchased your $10K limit. Me and my spouse bought an additional $20K each and we will hold them and gift them to each other in the next calendar year we do not buy any individually.
@@JayFairbrother thank you!
@@hrhsophiathefirst4060 thank you!
Thank you Jay and Sophia
This is amazing information. I subscribed because I’d like to learn more personal finance maximization tools 🎉
Killer video. Thanks for the info
Jay, if I bought a new Stern Pinball machine for $10K, instead of ibonds, would I get a better return on my pinball machine if I sold it in 5 years, than if I bought and sold ibonds in those 5 years?
Pinball machines will probably outpace I bonds, but they seem to be very hard to hold for a full 5 years…