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    i-bonds

    Anyone buying i bonds today? Fixed rate hit 0.5% today. I am thinking yes to $20k and then buying another $20k potentially next year
    LivingAlmostLarge Blog

    #2
    Hot diggity! Thanks for posting this -- I'm on a business trip, and I forgot that today was the rate release. I'll double-check, but I'm pretty sure that I already put in an order to buy some later this month (last week of Nov). I basically buy $5k every May & Nov. What I haven't done (but may consider, if I have the cash available) is buying another $10k/yr for my wife as well.

    I know I've researched this in the past, but I forget... I/EE bonds are tax-free if used for college expenses, but does anyone know off-hand if the ownership matters? Do they have to be in the name of the parents vs. the child? If they can/should be owned by the child, another option could be purchasing some in my sons' names.... But I don't think I'll have that much cash available to do (at least not within the next year or so).

    ETA: Just checked, and my order is in fact already in for 28 Nov (taking advantage of earning a full month's interest for holding it just a couple days). Also of note, the composite rate is 2.83% for the next 6 months. My Ally savings are earning 1.9%, so the extra 1% is nice....and fairly typical of my experience with I-Bonds... They've typically tended to earn .5-1% more than my online savings accounts have.
    Last edited by kork13; 11-01-2018, 03:13 PM.
    "Praestantia per minutus" ... "Acta non verba"

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      #3
      Kork the EE bonds have to be in the parents name to be used tax free for kids college. If kids have them in their names they have to wait until they're 24 to use them tax free for school.

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        #4
        Good to know. I'm buying at the end of the month.
        LivingAlmostLarge Blog

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          #5
          Tax free for college, but there are income limitations. For example, in 2017, you had to have MAGI less than $116,300 if married filing joint.

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            #6
            Originally posted by moneybags View Post
            Tax free for college, but there are income limitations. For example, in 2017, you had to have MAGI less than $116,300 if married filing joint.
            Our income is higher than this, so does this mean if I buy I bonds to use for DD's college in 8 years it would grow tax free but I'd have to pay taxes on it when I withdraw to use for tuition payments?

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              #7
              I have looked into using I bonds to pay for my daughter's college. I don't think I will. You can only use it for tuition and fees. No books or room and board. The benefit is reduced if you have scholarships, fellowships, use the tax free portion of a CSA, Veteran's benefits, employer assistance, "qualified tuition reductions", or any expense used in figuring the American Opportunity and lifetime learning credits. So it has very limited use for most people.

              Taken directly from the IRS website:

              Modified adjusted gross income limit.



              The interest exclusion is limited if your modified adjusted gross income (modified AGI) is:
              • $117,250 to $147,250 for married taxpayers filing jointly, and
              • $78,150 to $93,150 for all other taxpayers.

              You do not qualify for the interest exclusion if your modified AGI is equal to or more than the upper limit for your filing status.

              The only bright side is that it is your MAGI at the time you cash in the bonds and not when you buy them, so we would probably fall under the MAGI if for some reason my husband was retired when she went to college. That is a slim possibility but not totally out of the picture. I'm just not seeing a great advantage to using I bonds instead of funneling the money into a CSA for us.

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                #8
                Thanks for the info msomnipotent. My husband might also be retired when our daughter goes to college which is how we would qualify for the tax-free use for tuition. I guess I'm leaning toward I-Bonds for our extra savings/EF because we don't have to use it for her college and it will grow tax free regardless. We bought a CD from Ally that matures in Jan but we have to pay taxes on the interest immediately and the I-bond rate is currently higher.

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