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Taxes Done, I-Bonds Requested

Written by Nickel - 5 Comments

Taxes Done, I-Bonds Requested

With Tax Day fast approaching – and a soul-crushing week in my rearview mirror – I’m pleased to report that our taxes are done. We once again ended up owing and we did the old overpay to get I-Bonds trick.

So now… We wait.

As a reminder, the Treasury (mostly) eliminated paper savings bonds a couple of years ago. So now, instead of being able to buy $5k in paper bonds and $5k electronically each year, you can buy $10k in electronic bonds.

But there’s a loophole. You can use Form 8888 to request that up to $5k (in $50 increments) of your tax refund be paid to you in the form of paper Series I Savings Bonds. This is over and above your normal $10k allotment.

The only stumbling block is that you have to be expecting a refund for this to work. While it’s possible to adjust your withholding or otherwise make overpayments throughout the year, it’s probably easier to create the overage just before filing.

To do this, you can either submit a last minute quarterly payment (even if the January 15th deadline has passed) or you can request an extension of the filing deadline. Either way, this allows you to figure out exactly how much to pay in to create the $5k (or whatever) overage.

Last year we filed an extension, let the payment clear, and then filed our return. This year we were a bit more on the ball so I was able to make a (late) quarterly payment, wait for it to clear, and then file our return. Our savings bonds should be arriving in a few short weeks.

Published on March 24th, 2013
Modified on April 15th, 2013 - 5 Comments
Filed under: Saving & Investing, Taxes

About the author: is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!

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5 Responses to “Taxes Done, I-Bonds Requested”

  1. 1
    Alan@escapingmydebt Says:

    I may be reading it incorrectly but at the beginning you say you ended up owing, I am in the same boat this year. But later you say that this works only if you are expecting a refund.

  2. 2
    Nickel Says:

    Right. When we tallied everything up, we owed. So, to create a refund, I made an overpayment as a (late) quarterly estimated payment. So now we’re (artificially) due a refund. Last year we did something similar, in that we owed and filed an extension and made an overpayment to create the refund (in which case we no long owed). I’m sorry if that wasn’t clear.

  3. 3
    Tim Says:

    I am considering purchasing Ibonds myself and stopping my contributions to bond funds in my 401k..

    It seems like this might be a better approach.

    Why is it that you want the paper Ibonds? I would be just going to treasury direct and opening an account. But perhaps next year I can do this trick with Form 8888, but what is the reason for wanting to do so?? Can you please clarify.


  4. 4
    Nickel Says:

    Tim: I don’t really care that they’re paper. What I care about is that this $5k is in addition to the regular $10k limit.

  5. 5
    Bryan Says:

    I don’t understand the goal of the bonds. Why are you do focused on getting these into your possession? Rather than a cash return, why do you prefer the bonds?

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