Purchase Ibond tax return

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Mr. Potter
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Purchase Ibond tax return

Post by Mr. Potter »

My wife and just purchased Ibonds for the first time in 2022, each maxed at 10k. I understand I can purchase another 5k with our tax return. My question is can I just purchase the additional 5k in Ibonds and add them to one of our existing accounts or do you need to open and register a new joint account? Also, I assume these will be electronically issued not paper, is that accurate?
Affable at 50
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Re: Purchase Ibond tax return

Post by Affable at 50 »

Oak&Elm wrote: Sat Jan 22, 2022 7:17 am My wife and just purchased Ibonds for the first time in 2022, each maxed at 10k. I understand I can purchase another 5k with our tax return. My question is can I just purchase the additional 5k in Ibonds and add them to one of our existing accounts or do you need to open and register a new joint account? Also, I assume these will be electronically issued not paper, is that accurate?
This should help clarify how the process works.

https://www.irs.gov/refunds/now-you-can ... tax-refund
HomeStretch
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Re: Purchase Ibond tax return

Post by HomeStretch »

I-Bonds purchased with a Federal income tax refund are issued in (multiple) paper bonds. I have received mine within 4-6 weeks of return acceptance.

There is a TD FAQ on how to convert paper bonds to electronic bonds held in either your or your spouse’s existing TD account. You create a manifest, mail it with the paper bonds to TD and the bonds are electronically added to your existing TD account in a few weeks.

Once in my TD account, I do two things (there are TD FAQs on how to do these):
1. Merge the converted bonds in my TD “conversion” subaccount into my TD “main” account. Enables me to see all bonds on one screen and I only receive one Form 1099 (if applicable in the future).
2. grant “transact” rights to my spouse (co-owner) for each bond. My spouse can see and transact the bonds from spouse’s TD account.
Last edited by HomeStretch on Sat Jan 22, 2022 7:31 am, edited 1 time in total.
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Mr. Potter
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Re: Purchase Ibond tax return

Post by Mr. Potter »

Thanks Affable, got it, not sure I want to start collecting paper bonds, have to think about this a bit.
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Mr. Potter
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Re: Purchase Ibond tax return

Post by Mr. Potter »

Homestretch, how do you create a manifest?
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Mr. Potter
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Re: Purchase Ibond tax return

Post by Mr. Potter »

I just read on Treasury Direct about using Smart Exchange to convert paper to electronic, is this a simple process?
HomeStretch
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Re: Purchase Ibond tax return

Post by HomeStretch »

Oak&Elm wrote: Sat Jan 22, 2022 7:31 am Homestretch, how do you create a manifest?
Log into your TD account and under the “ManageDirect” tab you:
1) create a “Conversion” account (one time set up of a sub-account to hold converted paper bonds)
2) create a Manifest. You type in each Bond’s serial #, print out a list (the Manifest), sign it and mail the Manifest/paper Bonds to TD. I make a copy of the them and send the package via USPS with tracking.

TD’s website has FAQs on how to convert paper bonds. TFB has a good post on how to do it here:
https://thefinancebuff.com/how-to-depos ... count.html

It’s a bit of effort to convert but I like the ability to buy $5k more of I-Bonds.
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Mr. Potter
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Re: Purchase Ibond tax return

Post by Mr. Potter »

Awesome, thanks Homestretch
Angst
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Re: Purchase Ibond tax return

Post by Angst »

Oak&Elm wrote: Sat Jan 22, 2022 7:39 am I just read on Treasury Direct about using Smart Exchange to convert paper to electronic, is this a simple process?
I've done this multiple years, and although I found it was a big pain in the past, I find it's now quite easy. As HomeStretch does a great job of explaining above, you use the Treasury Direct (TD) website to generate a pdf in which you enter all your paper I Bonds.

Hint: Use your "copy and paste" keys on your PC, i.e. [Ctrl-C] and [Ctrl-V], to paste the serial number in for each bond, and then just change the last digit each time as you increment through all the paper I Bonds you got with your tax return.

Once done, you just stuff your paper bonds and the finished printout of your PDF file in a normal business size envelope and mail them in. TD already knows you created your PDF online and is expecting them, and I saw no need for certified mail or anything else than first class postage. As I recall, this last time it was no more than a couple weeks before I found they'd been added to my holdings online. At that point, I went through the steps at TD (also linked by HomeStretch above) to move them from the "conversion" sub-account into my main account. Not very difficult and took just a few minutes.

One last thing: For my records, I always first take a phone pic of all the I Bonds I'm mailing in, and of course I have the PDF file.
dcabler
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Re: Purchase Ibond tax return

Post by dcabler »

We've been doing this for years. We do the following
1. With each tax return, we alternate whose account the I-bonds we purchase via tax refund go to. This year, it's my wife's turn.
2. Once we receive the paper bonds in the mail, we go to the TD website and, as directed, create and print out a manifest with each of the paper bonds and then we mail then back to the treasury. Pro-Tip: Once you go down this path, decide if you're going to sort the bonds by highest value to lowest or lowest to highest. Arrange the list of bonds in the manifest accordingly and do it that way each year. I don't recommend just entering them randomly to create the manifest. If you sort them, then later after they're converted to electronic form, they will always appear in the same order on TD that you sorted them in. Makes it more convenient when grabbing data from TD to check on progress over time. My $0.02 YMMV.

Once processed by TD, they will land in the "converted" section of your account. We then move them to the main part of the account:
Go to My Converted Bonds linked account -> ManageDirect tab -> Transfer Securities -> Savings Bonds Series I radio button -> Submit -> Check the securities you want to transfer to primary -> Select -> enter your SSN & your Primary Account # in the Transfer Instructions boxes. Submit and Submit on the Confirmation page.

After that we then go back in and change the registration on each to be either Him WITH Her or Her WITH Him depending on whose account they land. Then we also go in and update transact rights, etc...

Because this only happens once a year, I recommend that after you've done it the first time, to create yourself a little document to go over everything you did step by step. Easy to forget.

Cheers.
SnowBog
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Re: Purchase Ibond tax return

Post by SnowBog »

And there are many who prefer paper bonds.

But if you'd rather have all digital, the process to convert is pretty easy.

Myself, I've covered all the old/random bonds I had from when I was a kid [that I could find - which was 1 :wink: ]. So, I'm familiar with that process... I did the $5k tax return last year, decided to keep those as paper bonds.
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Mel Lindauer
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Re: Purchase Ibond tax return

Post by Mel Lindauer »

SnowBog wrote: Sun Jan 23, 2022 7:37 pm And there are many who prefer paper bonds.

But if you'd rather have all digital, the process to convert is pretty easy.

Myself, I've covered all the old/random bonds I had from when I was a kid [that I could find - which was 1 :wink: ]. So, I'm familiar with that process... I did the $5k tax return last year, decided to keep those as paper bonds.
Lots of folks still prefer paper bonds. It's like having a government-issued check that you can take to the bank and cash at any time and have immediate access to the funds.

Great to have when your internet is down or the TD web site is down (or you get locked out).
Best Regards - Mel | | Semper Fi
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