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Getting paper Ibonds this way is also a way to bypass the 10k annual limit for an individual. You can use a tax refund to purchase an additional 5k within the y

by orev 5y ago

Getting paper Ibonds this way is also a way to bypass the 10k annual limit for an individual. You can use a tax refund to purchase an additional 5k within the year, enabling a total of 15k per year.

intrasight 5y ago
Does it makes sense perhaps to over pay taxes and then use the refund this way?
- koolba 5y ago
  When they’re paying 9.62% it certainly does. You’d have to do it preemptively though as the last opportunity to over is via a Jan 15th estimated tax payment. You can’t retroactively overpay, the money needs to be there before you file your taxes.
  - bombcar 5y ago
    Definitely do NOT misfile your return such that you get a large refund as I Bonds and then file a corrected return where you pay back. It's not legal and it's not worth it.
    - orev 5y ago
      Do you have a source for this? Where is it stated that one cannot overpay taxes for the purpose of getting a bigger return? Many people do this as a “savings” account as they’re not very good with savings so it sort of forces them to save since they don’t have access to the money.
      - allannienhuis 5y ago
        I believe he was suggesting misfiling, as in under reporting income or overreporting deductions in order to generate a fraudulent refund, which you could then fix/repay in cash (but keep the bonds).
      - bombcar 5y ago
        Overpaying is fine. Intentionally lying such that you get a larger return and then "fixing" the error by filing an amended return is not.
        orev 5y ago
        I see. “Misfile” vs “overpay”. There’s always some subtlety in finance terms!
    - koolba 5y ago
      I didn’t say misfile. I suggested making an estimated tax payment so that you have net credit at the IRS. It’s the same as applying your refund to the following year’s taxes. There’s no filing or claim of income, you’re simply parking money there to cover potential taxes. To do what I’m suggesting correctly, you’d calculate your tax liability or surplus before the last estimated tax payment date (Jan 15th) and make an estimated payment for the difference between that and the amount of I series bonds you’d like to purchase.
  - tbirdz 5y ago
    You don't have to make an estimated tax payment. You can also file an extension, and when you do that you can make a payment with IRS direct pay as well. Also just because you filed for an extension, that doesn't mean you have to file your tax return later, so you can just file your tax return when you would regularly payment. You can file for an extension much later than Jan 15th, I think the deadline is sometime in April.

by orev 5y ago

Getting paper Ibonds this way is also a way to bypass the 10k annual limit for an individual. You can use a tax refund to purchase an additional 5k within the year, enabling a total of 15k per year.

intrasight 5y ago

Does it makes sense perhaps to over pay taxes and then use the refund this way?

koolba 5y ago
When they’re paying 9.62% it certainly does. You’d have to do it preemptively though as the last opportunity to over is via a Jan 15th estimated tax payment. You can’t retroactively overpay, the money needs to be there before you file your taxes.
- bombcar 5y ago
  Definitely do NOT misfile your return such that you get a large refund as I Bonds and then file a corrected return where you pay back. It's not legal and it's not worth it.
  - orev 5y ago
    Do you have a source for this? Where is it stated that one cannot overpay taxes for the purpose of getting a bigger return? Many people do this as a “savings” account as they’re not very good with savings so it sort of forces them to save since they don’t have access to the money.
    - allannienhuis 5y ago
      I believe he was suggesting misfiling, as in under reporting income or overreporting deductions in order to generate a fraudulent refund, which you could then fix/repay in cash (but keep the bonds).
    - bombcar 5y ago
      Overpaying is fine. Intentionally lying such that you get a larger return and then "fixing" the error by filing an amended return is not.
      - orev 5y ago
        I see. “Misfile” vs “overpay”. There’s always some subtlety in finance terms!
  - koolba 5y ago
    I didn’t say misfile. I suggested making an estimated tax payment so that you have net credit at the IRS. It’s the same as applying your refund to the following year’s taxes. There’s no filing or claim of income, you’re simply parking money there to cover potential taxes. To do what I’m suggesting correctly, you’d calculate your tax liability or surplus before the last estimated tax payment date (Jan 15th) and make an estimated payment for the difference between that and the amount of I series bonds you’d like to purchase.
- tbirdz 5y ago
  You don't have to make an estimated tax payment. You can also file an extension, and when you do that you can make a payment with IRS direct pay as well. Also just because you filed for an extension, that doesn't mean you have to file your tax return later, so you can just file your tax return when you would regularly payment. You can file for an extension much later than Jan 15th, I think the deadline is sometime in April.