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Learning, Sharing, and Teaching => Investor Alley => Topic started by: FLBiker on October 22, 2021, 09:54:14 AM

Title: I-Bonds set to return 7.12% next month (November)
Post by: FLBiker on October 22, 2021, 09:54:14 AM
Sorry if this is old news to everyone, but I just put $10K into I-Bonds for my wife and myself.  The current rate is 3.54%, and it's going up to 7.12% next month (for 6 months).  I've never held I-Bonds before, but they're tied to inflation and the rates are set for 6 months at a time.  You can't withdraw for a year, and if you withdraw within the first 5 years you lose 3 months of interest.  I'm basically using them instead of an HISA right now, with an eye towards potentially paying off our house when our mortgage comes due in ~4 years (I'm in Canada, so mortgages are different here).  The money I'm putting into them had been earning 1%.  I'll probably do another $20K (10 each for my wife and I) in January.  You're limited to $10K per person per calendar year.

If, like me, you aren't familiar with these, there's a good article on how to buy them here: https://thefinancebuff.com/how-to-buy-i-bonds.html

Anyone else doing this?
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: bacchi on October 22, 2021, 10:12:39 AM
A lot of people are doing it. I also think that buying now is better than buying in November.

https://forum.mrmoneymustache.com/welcome-to-the-forum/series-i-savings-bonds-for-emergency-fund-3-54-interest-rate/

Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: FLBiker on October 22, 2021, 10:25:37 AM
A lot of people are doing it. I also think that buying now is better than buying in November.

https://forum.mrmoneymustache.com/welcome-to-the-forum/series-i-savings-bonds-for-emergency-fund-3-54-interest-rate/

Ah, thanks!  Mods, feel free to delete this thread.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: Roots&Wings on October 22, 2021, 11:02:09 AM
Glad you posted this, I hadn't seen it previously. Thanks for the info!
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: Gatzbie on October 22, 2021, 04:45:43 PM
Glad you posted this, I hadn't seen it previously. Thanks for the info!

Same boat. I'm in a crypto interest account for 8% but I'm thinking I could get my parents into this. It seems more safe & reasonable for them.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: MustacheAndaHalf on October 22, 2021, 08:29:33 PM
Glad you posted this, I hadn't seen it previously. Thanks for the info!
Same boat. I'm in a crypto interest account for 8% but I'm thinking I could get my parents into this. It seems more safe & reasonable for them.
I don't view 0.9% higher interest as worth the risk of crypto losing value.  Even Tether is backed by a company in Hong Kong who hasn't been transparent with their assets.  So from the perspective of risk adjusted return, having 7.12% backed by the full faith and credit of the United States seems like a better option to me.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: sisto on October 22, 2021, 09:14:27 PM
Sorry if this is old news to everyone, but I just put $10K into I-Bonds for my wife and myself.  The current rate is 3.54%, and it's going up to 7.12% next month (for 6 months).  I've never held I-Bonds before, but they're tied to inflation and the rates are set for 6 months at a time.  You can't withdraw for a year, and if you withdraw within the first 5 years you lose 3 months of interest.  I'm basically using them instead of an HISA right now, with an eye towards potentially paying off our house when our mortgage comes due in ~4 years (I'm in Canada, so mortgages are different here).  The money I'm putting into them had been earning 1%.  I'll probably do another $20K (10 each for my wife and I) in January.  You're limited to $10K per person per calendar year.

If, like me, you aren't familiar with these, there's a good article on how to buy them here: https://thefinancebuff.com/how-to-buy-i-bonds.html

Anyone else doing this?
You can also buy more if you have a trust.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: BicycleB on October 23, 2021, 02:14:58 PM
Sorry if this is old news to everyone, but I just put $10K into I-Bonds for my wife and myself.  The current rate is 3.54%, and it's going up to 7.12% next month (for 6 months).  I've never held I-Bonds before, but they're tied to inflation and the rates are set for 6 months at a time.  You can't withdraw for a year, and if you withdraw within the first 5 years you lose 3 months of interest.  I'm basically using them instead of an HISA right now, with an eye towards potentially paying off our house when our mortgage comes due in ~4 years (I'm in Canada, so mortgages are different here).  The money I'm putting into them had been earning 1%.  I'll probably do another $20K (10 each for my wife and I) in January.  You're limited to $10K per person per calendar year.

If, like me, you aren't familiar with these, there's a good article on how to buy them here: https://thefinancebuff.com/how-to-buy-i-bonds.html

Anyone else doing this?
You can also buy more if you have a trust.

Buy more if you have a trust?
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: waltworks on October 23, 2021, 03:04:45 PM
If you have a business, you can also buy through the business (same $10k/year limit).

The forum strikes again, I've moved most of our "high yield" cash into I bonds now.

-W
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: Debts_of_Despair on October 23, 2021, 08:06:14 PM
Any suggestions for a Vanguard fund to get in on this action?
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: Abe on October 23, 2021, 08:18:30 PM
Any suggestions for a Vanguard fund to get in on this action?

Can only purchase through the treasurydirect.gov website.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: Roots&Wings on October 24, 2021, 05:22:47 AM
Sorry if this is old news to everyone, but I just put $10K into I-Bonds for my wife and myself.  The current rate is 3.54%, and it's going up to 7.12% next month (for 6 months).  I've never held I-Bonds before, but they're tied to inflation and the rates are set for 6 months at a time.  You can't withdraw for a year, and if you withdraw within the first 5 years you lose 3 months of interest.  I'm basically using them instead of an HISA right now, with an eye towards potentially paying off our house when our mortgage comes due in ~4 years (I'm in Canada, so mortgages are different here).  The money I'm putting into them had been earning 1%.  I'll probably do another $20K (10 each for my wife and I) in January.  You're limited to $10K per person per calendar year.

If, like me, you aren't familiar with these, there's a good article on how to buy them here: https://thefinancebuff.com/how-to-buy-i-bonds.html

Anyone else doing this?
You can also buy more if you have a trust.

Buy more if you have a trust?

A trust has an additional $10k/yr purchase allowance. Same with a business. Plus another $5k from tax refund. The article the OP linked explains this.

A single person could buy up to $35k/yr: $10k individual + $10k trust + $10k business + $5k tax refund. Married people with a business and trust up to $65k/yr.

I'm planning to overpay estimated taxes this year to do the extra $5k tax refund purchase. Haven't found anything prohibiting this (Bogleheads indicates it's fine:  https://www.bogleheads.org/wiki/I_savings_bonds#Purchasing_with_your_IRS_tax_refund).

The historical composite rates show I've stupidly been losing out for many years: https://www.savingsbonds.gov/indiv/research/indepth/ibonds/res_ibonds_iratesandterms.htm#compositerate   

And thanks @FLBiker, I opened an account and bought the first $10k, fairly easy aside from that surprise keyboard password login. Will need to designate the beneficiary once the purchase goes through next week, that'll be a minor inconvenience since they require beneficiary per bond holding, not for the account as a whole. Other potential "downside" could be tax implications when redeemed; if held the full 30 years, that could be sizable.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: JJ- on October 24, 2021, 08:06:44 AM
I was looking at treasury website and it didn't look like businesses could buy these? Is it for 5515 i need to review?

It also said in some cases trusts. Where can I find more documentation on this?
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: BicycleB on October 24, 2021, 04:41:12 PM
Sorry if this is old news to everyone, but I just put $10K into I-Bonds for my wife and myself.  The current rate is 3.54%, and it's going up to 7.12% next month (for 6 months).  I've never held I-Bonds before, but they're tied to inflation and the rates are set for 6 months at a time.  You can't withdraw for a year, and if you withdraw within the first 5 years you lose 3 months of interest.  I'm basically using them instead of an HISA right now, with an eye towards potentially paying off our house when our mortgage comes due in ~4 years (I'm in Canada, so mortgages are different here).  The money I'm putting into them had been earning 1%.  I'll probably do another $20K (10 each for my wife and I) in January.  You're limited to $10K per person per calendar year.

If, like me, you aren't familiar with these, there's a good article on how to buy them here: https://thefinancebuff.com/how-to-buy-i-bonds.html

Anyone else doing this?
You can also buy more if you have a trust.

Buy more if you have a trust?

A trust has an additional $10k/yr purchase allowance. Same with a business. Plus another $5k from tax refund. The article the OP linked explains this.

A single person could buy up to $35k/yr: $10k individual + $10k trust + $10k business + $5k tax refund. Married people with a business and trust up to $65k/yr.


Wow!

I did finally read the linked article. And the article it linked to. And sent them on to friends who have cash-heavy friends of their own.

Thanks. :)
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: TeeNixx on October 25, 2021, 10:46:53 PM
PTF
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: dividendman on October 28, 2021, 06:10:33 PM
Why can't an individual just get EIN for like 10 (or however many) Sole Proprietorships just for investing in iBonds and then invest in as many as the individual wants?

Can't Sole Proprietorships just be investment companies that just hold iBonds?

Posted the same question here:

https://forum.mrmoneymustache.com/entrepreneurship/sole-proprietorship(s)-just-for-buying-more-ibonds/ (https://forum.mrmoneymustache.com/entrepreneurship/sole-proprietorship(s)-just-for-buying-more-ibonds/)

I couldn't find the answer and am pretty close to trying to open like 10-20 accounts...
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: BicycleB on October 28, 2021, 06:23:35 PM
Why can't an individual just get EIN for like 10 (or however many) Sole Proprietorships just for investing in iBonds and then invest in as many as the individual wants?

Can't Sole Proprietorships just be investment companies that just hold iBonds?

Posted the same question here:

https://forum.mrmoneymustache.com/entrepreneurship/sole-proprietorship(s)-just-for-buying-more-ibonds/ (https://forum.mrmoneymustache.com/entrepreneurship/sole-proprietorship(s)-just-for-buying-more-ibonds/)

I couldn't find the answer and am pretty close to trying to open like 10-20 accounts...

@dividendman, not a lawyer here, but sole proprietorships just represent an individual. Unlike a fundamentally separate entity with legal protections such as an LLC or an S Corp, it's just you. Seems very fraudulent to me.

I hope "pretty close to trying" means you'll research more before you open any extra accounts. And, probably, decide not to do this.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: bacchi on October 28, 2021, 07:04:26 PM
I'm planning to overpay estimated taxes this year to do the extra $5k tax refund purchase.

If you file in April, you'll have a pretty good guess what the next 6 month rate will be.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: PDXTabs on October 28, 2021, 07:13:07 PM
Why can't an individual just get EIN for like 10 (or however many) Sole Proprietorships just for investing in iBonds and then invest in as many as the individual wants?

Can't Sole Proprietorships just be investment companies that just hold iBonds?

Posted the same question here:

https://forum.mrmoneymustache.com/entrepreneurship/sole-proprietorship(s)-just-for-buying-more-ibonds/ (https://forum.mrmoneymustache.com/entrepreneurship/sole-proprietorship(s)-just-for-buying-more-ibonds/)

I couldn't find the answer and am pretty close to trying to open like 10-20 accounts...

@dividendman, not a lawyer here, but sole proprietorships just represent an individual. Unlike a fundamentally separate entity with legal protections such as an LLC or an S Corp, it's just you. Seems very fraudulent to me.

I hope "pretty close to trying" means you'll research more before you open any extra accounts. And, probably, decide not to do this.

I'm not a lawyer either, but I would be surprised if an LLC that is taxed as a sole proprietorship and a sole proprietorship without the LLC liability shield were treated differently in this respect.

Either way I would like to know the answer. Opening LLCs isn't hard or expensive.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: dividendman on October 28, 2021, 08:56:16 PM
Why can't an individual just get EIN for like 10 (or however many) Sole Proprietorships just for investing in iBonds and then invest in as many as the individual wants?

Can't Sole Proprietorships just be investment companies that just hold iBonds?

Posted the same question here:

https://forum.mrmoneymustache.com/entrepreneurship/sole-proprietorship(s)-just-for-buying-more-ibonds/ (https://forum.mrmoneymustache.com/entrepreneurship/sole-proprietorship(s)-just-for-buying-more-ibonds/)

I couldn't find the answer and am pretty close to trying to open like 10-20 accounts...

@dividendman, not a lawyer here, but sole proprietorships just represent an individual. Unlike a fundamentally separate entity with legal protections such as an LLC or an S Corp, it's just you. Seems very fraudulent to me.

I hope "pretty close to trying" means you'll research more before you open any extra accounts. And, probably, decide not to do this.

I'm not a lawyer either, but I would be surprised if an LLC that is taxed as a sole proprietorship and a sole proprietorship without the LLC liability shield were treated differently in this respect.

Either way I would like to know the answer. Opening LLCs isn't hard or expensive.

I don't see how it's at all fradulent. I'm running investment holding businesses as a sole proprietorship. I've read up on it some more and there doesn't seem to be any problem with asking for more EINs for as many money-making ventures you have.

The key aspect of the "sole" proprietorship is that it has only one owner - you. The reverse is not true, i.e. while it can't be many (owners) to one (business), it can be 1 to many. i.e. I am the sole owner of multiple businesses.

LLCs also aren't expensive but they are a bit more of a hassle and so I'm looking into the sole proprietorship option. It will be a hassle to keep all the treasurydirect accounts in order but that's a small amount of work for a great rate.

My goal is simply to move my entire bond allocation into iBonds via this mechanism.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: dividendman on October 28, 2021, 09:00:38 PM
The one wrinkle is that you can only ask for one EIN per day. So to open 20 or so would take about 20 days....

Actually, the more I read, the more I think I don't even need multiple EINs, I just need "entity names" for all of my sole proprietorship businesses, then I can just use my own SSN. Now I'm looking up how to get entity names...
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: BicycleB on October 28, 2021, 11:24:10 PM
The one wrinkle is that you can only ask for one EIN per day. So to open 20 or so would take about 20 days....

Actually, the more I read, the more I think I don't even need multiple EINs, I just need "entity names" for all of my sole proprietorship businesses, then I can just use my own SSN. Now I'm looking up how to get entity names...

Are you going to change your name to Interestman?
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: roomtempmayo on October 29, 2021, 01:41:30 PM
Jason Zweig gives I-Bonds a mention in the WSJ today.  First time I've seen them in a mainstream publication.

https://www.wsj.com/articles/deflating-your-inflation-investing-fears-11635519805?mod=hp_lead_pos12

Quote
Fortunately, the stock market overall has outpaced moderate rises in the cost of living. From 1927 through 2020, according to Dimensional, U.S. stocks as a whole outperformed inflation by an average of 4.9 percentage points annually in years when rises in the cost of living were above the median. If your stock portfolio is already well diversified, it should be able to keep pace with modestly rising prices.

You can also add TIPS, or Treasury inflation-protected securities. Even though they aren’t cheap, they still offer protection against unexpected jumps in consumer prices down the road. So do inflation-protected savings bonds, or I bonds.

What you probably don’t need is to inflate your fees and your risk, for real, to protect against inflation that might turn out to be a phantom.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: StacheyNotTrashy on November 01, 2021, 03:00:28 PM
So if I buy in November @7.12% for the first 6 months when do I find out what the rate for the next 6 months will be? April 2022?
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: dandarc on November 01, 2021, 03:04:02 PM
So if I buy in November @7.12% for the first 6 months when do I find out what the rate for the next 6 months will be? April 2022?
Yep. I-Bond rate is set twice per year, in April and October.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: Fomerly known as something on November 03, 2021, 11:26:19 PM
Moving myself back into I bonds, and am getting my conservative mom to move 40k into them between her and my dad by Jan 2022.  First I had to explain that Treasury Direct was the US Treasury department.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: mntnmn117 on November 04, 2021, 10:22:07 AM
Opened an account and doing this today. Dang the website is sketchy looking.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: dividendman on November 04, 2021, 12:22:15 PM
Opened an account and doing this today. Dang the website is sketchy looking.

That's how you know it's an official government site!
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: dandarc on November 04, 2021, 02:06:32 PM
Opened an account and doing this today. Dang the website is sketchy looking.

That's how you know it's an official government site!
Having built web applications for government entities for well over a decade now, I resemble that remark.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: geekette on November 04, 2021, 02:13:55 PM
I tried to convince my sister to buy some with their cash moldering in the bank.  She said her husband refused to move money out of the bank because he didn't want to lose money.  Not that he isn't losing it to inflation as it is...

Actually it was a very frustrating few days with my sisters, but it sure made me aware why we have a much higher net worth than they do. 
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: BicycleB on November 04, 2021, 03:31:05 PM
I tried to convince my sister to buy some with their cash moldering in the bank.  She said her husband refused to move money out of the bank because he didn't want to lose money.  Not that he isn't losing it to inflation as it is...

Actually it was a very frustrating few days with my sisters, but it sure made me aware why we have a much higher net worth than they do

Some pieces of knowlege are priceless
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: habanero on November 04, 2021, 03:37:52 PM
Opened an account and doing this today. Dang the website is sketchy looking.

I was very fascinated when I discovered it (Im not American so can't use it though). One was the fact that you could, on a website, actully buy govvies directly from the mothership and the other was the looks of it.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: PDXTabs on November 04, 2021, 03:49:40 PM
Opened an account and doing this today. Dang the website is sketchy looking.

I was very fascinated when I discovered it (Im not American so can't use it though). One was the fact that you could, on a website, actully buy govvies directly from the mothership and the other was the looks of it.

Just setup a South Dakota trust (https://www.thenation.com/article/society/south-dakota-trusts/)! That's mostly a joke, but in all seriousness it seems like you should be able to form an LLC in some state somewhere (maybe Nevada) and buy these if you really want to.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: stepingum on November 17, 2021, 04:24:33 AM
I'm trying to find ways around the $10k/ year purchase limit and stumbled on this idea. Thoughts?

I have two minor children that will still be minor children when I will probably need to redeem these (5-10 years). Gifting them I Bonds doesn't seem like a great idea, but I found a thread saying I could make them Co owners instead! If they are listed first, it counts towards their purchase limit. And in 5-10 years I can redeem them legally, as an owner, and pay taxes easily (1099-INT should go to me if the funds a deposited in my account). Genius! Or, too good to be true?

Back story, my husband is very fiscally conservative (like, cash under the mattress), but I think I convinced him why this is safer/better than cash, so I'd like to purchase as much as possible while he's on board with the idea (and get a bunch of cash somewhere where it isn't rotting into nothingness).
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: JoePublic3.14 on November 17, 2021, 04:46:58 AM
Opened an account and doing this today. Dang the website is sketchy looking.

I tried to open an account and got the dreaded ‘cannot verify some of your info' which means I have to fill out a form and get a signature guarantee (step down from a medallion). Ugh. That means I have to find a place to print a page (easy, but annoying) and a banker who will do the guarantee. I have no local bank, and have not been a bank since who knows when. I guess I’ll call a small local bank and see what say.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: sonofsven on November 17, 2021, 04:59:36 AM
ptf.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: px4shooter on November 17, 2021, 05:50:49 PM
Is this the highest amount it has been or is there a way to check history?

Just did me and the spouse. Have 4 LLCs we can do too along with kids. Keep getting a weird "site is currently down" error though.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: PDXTabs on November 17, 2021, 06:12:05 PM
Is this the highest amount it has been or is there a way to check history?

There's this chart: https://www.treasurydirect.gov/indiv/research/indepth/ibonds/ibondratechart.pdf
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: stepingum on January 25, 2024, 09:47:20 AM
I'm trying to find ways around the $10k/ year purchase limit and stumbled on this idea. Thoughts?

I have two minor children that will still be minor children when I will probably need to redeem these (5-10 years). Gifting them I Bonds doesn't seem like a great idea, but I found a thread saying I could make them Co owners instead! If they are listed first, it counts towards their purchase limit. And in 5-10 years I can redeem them legally, as an owner, and pay taxes easily (1099-INT should go to me if the funds a deposited in my account). Genius! Or, too good to be true?


So, I ended up doing this and also redeemed my minor children's I Bonds that I co-owned  with them this past year. The I Bonds were both purchased and redeemed through my personal checking account. I just got our tax documents from the Treasury and the 1099-INTs are not in my name! Did I do something illegal? What do I do with 1099s for my minor children? Do they need to file taxes this year too? Or can I just take responsibility for the interest (which I earned) and include it in my taxes? Bah! What a mess.

@SeattleCPA
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: Financial.Velociraptor on January 25, 2024, 10:00:58 AM
Did I do something illegal? What do I do with 1099s for my minor children? Do they need to file taxes this year too? Or can I just take responsibility for the interest (which I earned) and include it in my taxes? Bah! What a mess.

@SeattleCPA

Nothing illegal has happened here (not legal advice!)  Your children might need to file but probably not.  Check IRS.gov and search "do I have to file?"  There is a minimum amount of income a person can make annually (last time I needed to research that for a neighbor's minor child, it was over $6k/yr) without needing to file.  Even if they HAVE to file, it seems absurd that they made enough from one or two year's Ibonds to exceed their standard deduction.  Since there is no withholding there will be no incentive to file voluntarily.  You cannot take responsibility for the their 1099 income.  But it is enormously unlikely they made enough in 1099 income that they are required to file with just one year's worth of Ibonds so it is advantageous to let them earn that income with zero tax liability incurred.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: seattlecyclone on January 25, 2024, 10:12:50 AM
The IRS has a form (https://www.irs.gov/pub/irs-pdf/f8814.pdf) for this case, allowing you to report your kid's interest and dividends on your own tax return ($12,500 of income max). There are cases where filing the kid's own tax return would result in less tax owed between the two of you, but it looks as though if the amount is less than $1,250 of income per kid you'll pay no tax when reporting it this way.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: stepingum on January 25, 2024, 10:36:17 AM
Thanks for the guidance, I think I'm making progress on this. They each have $2500 in unearned income, which exceeds the $1250 limit, triggering a requirement to file. I think I can file Form 8814 and claim it on my return, but I'm unclear if that is the best option? If I don't do that, then I need to file for my children... which seems like a better option tax-wise, but maybe I'm missing something? Does anyone have any insight on this? Appreciate the help!!
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: seattlecyclone on January 25, 2024, 11:02:55 AM
Taxes are complicated and the only way to know for sure which way results in less tax is to do your taxes each way and see.
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: Financial.Velociraptor on January 25, 2024, 11:04:59 AM
So i just learned something - you can claim minor children's income on your return.  I'm sort of confused why you would though?

To my simple way of thinking, if the children file separately, they each get 13,850 in standard deduction resulting in a tax liability of zero.  Why is it advantageous to the parent to pay taxes that aren't actually owed by the children? I suppose if you are lean fire and gaming your ACA credit it could be useful. 

Also, see the online tool to determine if the children have a filing requirement: https://www.irs.gov/help/ita/do-i-need-to-file-a-tax-return (https://www.irs.gov/help/ita/do-i-need-to-file-a-tax-return)
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: Financial.Velociraptor on January 25, 2024, 11:06:18 AM
Taxes are complicated and the only way to know for sure which way results in less tax is to do your taxes each way and see.

Right?  I mean the 'flat tax' is inherently evil.  But...yes, please!
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: seattlecyclone on January 25, 2024, 11:44:01 AM
To my simple way of thinking, if the children file separately, they each get 13,850 in standard deduction resulting in a tax liability of zero.

The standard deduction for dependents with no earned income (https://www.irs.gov/taxtopics/tc551) is just $1,250 (and this lines up with the tax-free amount if you report the child's investment income on your own return).
Title: Re: I-Bonds set to return 7.12% next month (November)
Post by: Must_ache on January 25, 2024, 11:55:08 AM

Right?  I mean the 'flat tax' is inherently evil.  But...yes, please!

No it isn't.