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Basically, you create a separate (linked) account for converted bonds. You create a manifest (list) of bonds to convert, including their serial numbers and other info. You mail the savings bonds along with that manifest (printed out), and (these days) a few months later they'll show up in your account.
There's no rush because you can't cash them out for at least a year. And should they get lost in the mail (either coming to you as part of your refund or going back to Treasury Direct), you can request replacements.
The awkwardness is in having to handle the paper bonds and in having a different account number for the bonds at TD. Still a single login, so it's not too bad. And how often do you need to log in to look at these set-and-forget savings bonds?
You can also hold the paper bonds yourself, perhaps in a safe deposit box.
The mail in process isn't hard, though a tad more tedious than one would like. And you only have to create that second account once.
As I've posted before, the USPS lost one $50 refund savings bond of mine (out of a $5000 total). TD replaced it many months after I reported it as never having been received. Unfortunately the replacement was another paper bond.
So while you might have $1200 to send in, I'm stuck with a single $50 bond to have and to hold (or to mail in). I mailed in (converted) the other $4950 long ago.
Thanks for your earlier tip @msf. I put in additional $ by year-end so to ensure the tax refund is over $5K. Just filed our return and will be getting two $2,500 I bonds for me and my wife.
The current IRS form 8888 says you can have your refund electronically deposited to a Treasury Direct account, avoiding paper bonds.
"You can request that your refund (or part of it) be used to buy up to $5,000 in series I savings bonds. You can buy them electronically by direct deposit into your TreasuryDirect® account. See instructions under Part I for details. Or, if you don’t have a TreasuryDirect® account, you can buy paper savings bonds. See the instructions under Part II for details."
It looks like one would enter the TD account number, check the Savings box, and use the Treasury Direct routing number 051736158 as one of the Part I items. Has anyone succeeded in doing this?
TD has told me (on the phone) that one can buy I-bonds electronically with refunds. I have no doubt one is able to purchase bonds electronically this way. But I remain skeptical about this procedure enabling one to purchase additional $5K in savings bonds above and beyond one's $10K/year limit.
What you quoted sounds like the standard way of buying electronic savings bonds. One deposits money into a TD account. Then one uses the money in that account to purchase electronic savings bonds.
On the first page is a description of how you fund your TD account to buy savings bonds:
"How do I buy savings bonds? ... Have your bank or employer send funds directly to your TreasuryDirect account, or send IRS Form 8888 with your federal tax return and direct your refund to your TreasuryDirect account."
There's no verbiage in this section about actually buying savings bonds with this money. This is the way you buy any electronic savings bonds, Series I or Series EE. Nor is any distinction drawn between money in your account that came from your bank, your payroll department, or the IRS.
On the second page is a box that reads: Series I BondsSeries EE Bonds Sold electronically at face [sold $25 to $10,000] value in any amount from $25 to 10,000. Sold in paper at face value, in multiples of $50, up to $5,000. Use IRS Form 8888. ... Each year, buy as much as $10,000 of electronic Series I, $10,000 of electronic Series EE, and $5,000 of paper Series I.
Can we assume the instructions for having IRS send your refund to your TD account instead of your Bank account are the same as TD instructions to have employer send in money directly
"To have your employer send the money You will fill out a direct deposit form that needs this information:
The "receiving bank name": TREASURYDIRECT (all capitals, no space) The routing number for TreasuryDirect: 051736158 Your 10-digit TreasuryDirect account number, no hyphens, with a P at the end (Example: A123456789P) How much money you want to have your employer send from each paycheck Where the form asks if this is a savings account (22) or a checking account (23), you can choose either. That doesn't matter to our system."
The form 8888 instructions say
An account can be a checking, savings, or other account such as an IRA, HSA, Archer MSA, ESA, or TreasuryDirect® online account.
IT would probably work, but I am not sure I want to risk my $2500 refund. Still the form 8888 instructions say if the electronic account rejects your refund, they will issue paper check.
Anybody tried this?
I have to file on paper this year so who knows how long it will take for me to find out.
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."
Edit/Add: Instructions about "Savings" may be important. One year, I forgot to checkmark "Checking" for my bank checking a/c and I got a paper check. The IRS couldn't figure out whether it was checking or savings although I had used that checking account previously.
It looks like the instructions are the same, aside from Yogi's edit warning to check a box (either savings or checking) rather than leave it blank.
Reiterating my prior warning - it looks like refund money that is sent electronically will be applied against your annual $10K limit for buying electronic Series I savings bonds. It won't up your limit to $15K:
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.
Same as if the cash had come from your bank.
If your sole objective is to get cash into Treasury Direct in order to buy savings bonds, you could just transfer $2500 from your bank account now instead of waiting for the $2500 from your tax refund to hit TD. That way, you'll be able to control when you purchase savings bonds (the rates change at the end of this month).
Thanks for all the information. Using TurboTax, we filed our tax return already and getting a paper copy of I bond. Will deposit that into our TD account when it arrives.
Thanks for all the info. If electronic deposits (vs paper bond) does not increase annual limit it makes little sense for me, especially as it is unclear if I bonds will be as attractive as they were last year.
I've done it twice, no problem. But, once you are presented with a TurboTax screen, it can be frustrating to navigate your way back to it. Use the bookmark function, it you are not ready to commit. The paper bond takes a while to arrive. Buying I-bonds, you are allowed $10,000 per person, plus $5,000 per return. So, we have purchased $25,000 in I-bonds for 2023.
@WhollyTerriers said: But, once you are presented with a TurboTax screen, it can be frustrating to navigate your way back to it. Use the bookmark function, it you are not ready to commit. The paper bond takes a while to arrive.
Great for you. Slow but it works. Reminds us of the old days with paper stock certificates.
How long it took? Our return was accepted promptly after we submitted. The Federal refund has not appeared in our bank, but the state refund showed up quickly.
Comments
The TreasuryDirect instructions are here:
https://treasurydirect.gov/savings-bonds/manage-bonds/convert-paper-to-electronic/#id-how-do-i-convert-my-ee-or-i-bonds--508815
Basically, you create a separate (linked) account for converted bonds. You create a manifest (list) of bonds to convert, including their serial numbers and other info. You mail the savings bonds along with that manifest (printed out), and (these days) a few months later they'll show up in your account.
There's no rush because you can't cash them out for at least a year. And should they get lost in the mail (either coming to you as part of your refund or going back to Treasury Direct), you can request replacements.
The awkwardness is in having to handle the paper bonds and in having a different account number for the bonds at TD. Still a single login, so it's not too bad. And how often do you need to log in to look at these set-and-forget savings bonds?
Maybe if I overpaid by $5000 it would be more worthwhile!
The mail in process isn't hard, though a tad more tedious than one would like. And you only have to create that second account once.
As I've posted before, the USPS lost one $50 refund savings bond of mine (out of a $5000 total). TD replaced it many months after I reported it as never having been received. Unfortunately the replacement was another paper bond.
So while you might have $1200 to send in, I'm stuck with a single $50 bond to have and to hold (or to mail in). I mailed in (converted) the other $4950 long ago.
"You can request that your refund (or part of it) be used to buy up to $5,000 in series I savings bonds. You can buy them electronically by direct deposit into your TreasuryDirect® account. See instructions under Part I for details. Or, if you don’t have a TreasuryDirect® account, you can buy paper savings bonds. See the instructions under Part II for details."
https://www.irs.gov/pub/irs-pdf/f8888.pdf
It looks like one would enter the TD account number, check the Savings box, and use the Treasury Direct routing number 051736158 as one of the Part I items. Has anyone succeeded in doing this?
What you quoted sounds like the standard way of buying electronic savings bonds. One deposits money into a TD account. Then one uses the money in that account to purchase electronic savings bonds.
Here's a two page piece from TD on "Buying Savings Bonds ..."
https://www.treasurydirect.gov/forms/mar0023.pdf
On the first page is a description of how you fund your TD account to buy savings bonds:
"How do I buy savings bonds? ... Have your bank or employer send funds directly to your TreasuryDirect account, or send IRS Form 8888 with your federal tax return and direct your refund to your TreasuryDirect account."
There's no verbiage in this section about actually buying savings bonds with this money. This is the way you buy any electronic savings bonds, Series I or Series EE. Nor is any distinction drawn between money in your account that came from your bank, your payroll department, or the IRS.
On the second page is a box that reads:
Series I Bonds Series EE Bonds
Sold electronically at face [sold $25 to $10,000]
value in any amount from
$25 to 10,000. Sold in
paper at face value, in
multiples of $50, up to
$5,000. Use IRS Form 8888.
...
Each year, buy as much as $10,000 of electronic Series I,
$10,000 of electronic Series EE, and $5,000 of paper Series I.
"To have your employer send the money
You will fill out a direct deposit form that needs this information:
The "receiving bank name": TREASURYDIRECT (all capitals, no space)
The routing number for TreasuryDirect: 051736158
Your 10-digit TreasuryDirect account number, no hyphens, with a P at the end
(Example: A123456789P)
How much money you want to have your employer send from each paycheck
Where the form asks if this is a savings account (22) or a checking account (23), you can choose either. That doesn't matter to our system."
The form 8888 instructions say
An account can be a checking, savings,
or other account such as an IRA, HSA,
Archer MSA, ESA, or TreasuryDirect®
online account.
IT would probably work, but I am not sure I want to risk my $2500 refund. Still the form 8888 instructions say if the electronic account rejects your refund, they will issue paper check.
Anybody tried this?
I have to file on paper this year so who knows how long it will take for me to find out.
"Using Your Tax Refund for TreasuryDirect
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."
Edit/Add: Instructions about "Savings" may be important. One year, I forgot to checkmark "Checking" for my bank checking a/c and I got a paper check. The IRS couldn't figure out whether it was checking or savings although I had used that checking account previously.
Reiterating my prior warning - it looks like refund money that is sent electronically will be applied against your annual $10K limit for buying electronic Series I savings bonds. It won't up your limit to $15K:
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.
Same as if the cash had come from your bank.
If your sole objective is to get cash into Treasury Direct in order to buy savings bonds, you could just transfer $2500 from your bank account now instead of waiting for the $2500 from your tax refund to hit TD. That way, you'll be able to control when you purchase savings bonds (the rates change at the end of this month).
The paper bond takes a while to arrive.
Buying I-bonds, you are allowed $10,000 per person, plus $5,000 per return. So, we have purchased $25,000 in I-bonds for 2023.
Thought they would be bigger like stock certificates. Will follow @msf instruction above to send them to Treasury Direct. Thank you again.