Hint: It’s a bit complicated. What else would you expect?
Editor’s note: In October 2021, Wisconsin-based financial adviser Jeremy Keil invited me onto his podcast to talk about I Bonds. He was ahead of the curve on I Bonds, educating himself on a topic that would be of great benefit to his clients. Later on, he mentioned to me that he was going to get paper I Bonds in lieu of a federal tax refund, and then convert them to electronic I Bonds at TreasuryDirect. I asked him if he’d write a step-by-step description of the entire process, and here it is …
By Jeremy Keil, CFP®, CFA
With purchases of US Series I Savings Bonds (I Bonds) exploding over the past year and a cap of $10,000 per person in electronic savings bonds, many people are trying to go past that cap by using their tax refund to buy up to $5,000 more.
They may be surprised to see these $5,000 savings bonds come in paper form and are curious how to convert them over to electronic form.
I went through the process of getting paper savings bonds from my tax return and converted them into my online Treasury Direct account so I could live to tell the tale and give you a step-by-step guide on how to do it.
How to get US Series I Savings Bonds from your tax return
If you are intentionally trying to get I Bonds from your tax refund you’ll likely want to overpay, on purpose, estimated taxes into the IRS, probably closer to the end of the year.
Make sure you are aware of:
- Form 1040-ES (Estimated Tax Payments) for making a payment of estimated tax by check. (instructions are attached in that link)
- Or the IRS electronic payment system.
- Form 8888 Allocation of Refund (Including Savings Bond Purchases) to use at least part of your refund to buy up to $5,000 in paper series I savings bonds. (instructions are attached in that link)
Alert your tax preparer to your desire to receive part of your refund in paper savings bonds. Chances are you have already maxed out the Treasury’s $10,000 per person/entity per calendar year limit for I Bonds. With the added steps to get paper savings bonds, you likely want the $5,000 per return max if you’re going through this exercise.
After you file your return wait a few weeks (or months!) and you’ll get a series of envelopes in the mail from “Treasury Retail Securities.”
I was quite surprised to get a stack of multiple envelopes.
When I opened the first one it was for $50, and I thought “if they sent me 100 – $50 US Savings Bonds that’s crazy!” but it turned out they sent me 12 total bonds. 4 – $1,000; 1 – $500; 1 – $200; 6 – $50.
Then came the next step:
How to convert paper savings bonds into electronic form
Treasury Direct has a page that gives you some instructions, but below are the steps (with pictures) I took to convert my paper saving bonds into electronic form.
I’ll emphasize it again, but do NOT sign the back of your savings bonds at any time during this process.
I’m assuming you already have a Treasury Direct account. If not go here for instructions on how to open the account.
- Log in to TreasuryDirect.
2. Click on Manage Direct, one of the middle blue menu buttons at the top of the page.
3. Click on Establish a Conversion Linked Account
4. Next, click Create Account
5. You will then be in your “Conversion Account” – Click on Manage Direct again, in the blue box at the top of the page.
6. Under Manage My Conversions, click on “Convert my bonds.”
7. Select the Registration you are converting for (likely your own) and continue
8. Then start adding in paper savings bonds to your cart
9. Once you have added all your paper bonds, click view cart, and once you are ready, click Create a Manifest
10. You will now have a paper manifest you can use to print and mail in with your paper savings bonds. Do NOT sign the back of your savings bonds!
11. The manifest will give you a P.O. box and a physical mailing address. You will sign your manifest. Do NOT sign the back of your savings bonds!
I suggest using some sort of tracking system through USPS, UPS, or FedEx so that you can know when your savings bonds arrive, which means you’d likely mail it to the physical address, not the P.O. box.
I also suggest keeping a copy of your manifest, and making a copy of the savings bonds you send in.
12. Double check through the mail tracking system you used that the bonds arrived, and then wait a few weeks and you’ll see your paper bonds are now listed in your conversion account.
What comes next?
It’s an odd system, but you’ll essentially have two accounts through Treasury Direct that are accessed through your main account login.
The first is your regular login that will list out your current securities total, and your current holdings.
The second is listed towards the bottom of the page, and you’ll have to click on My Converted Bonds to get into and transact on that part of your account.
Now that you know how to link your paper savings bonds into your online TreasuryDirect account, please spread the word – especially to people like your parents who probably have old paper savings bonds.
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Jeremy Keil, CFP®, CFA is a retirement focused financial planner with Keil Financial Partners. If you have retirement, investment or tax planning questions Jeremy’s team can get you started in the right direction.
Jeremy also hosts the Retirement Revealed blog and podcast where you will learn more about your money, feel better about your money and make better money decisions.
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