Go directly to: ✰ U.S. GOVT Series EE Savings Bonds
⚫ Keeping track of your Saving Bonds values (EE and I)
✰ U.S. GOVT Series I Savings Bonds
[WSJ reported on 10/27/2022, that more than $22.3 billion worth of I Bonds have been purchased in 2022, through September, because TreasuryDirect announced in April that the current annual rate of 9.62% accompanies an investment in I bonds (for the first six months)!]
[UPDATED 4/28/2022; Inspired to consider Savings Bonds by Harry Sit (The Finance Buff blog); review his great presentation here)]
My original article follows.
Our economy is expected to eventually mimic Japan’s (negative returns), and with the rate of inflation expected to increase soon, an investment where your earnings are guaranteed and adjusted to match the rate of inflation, not lose to it, sounds most favorable.
I observed today, that by entering the purchase of Savings Bonds by the conventional method, using Money’s dedicated investment type “CD or U.S. Savings Bond”, the bonds don’t show up as investments in the Portfolio Manager screens, nor is there a means of updating the value to reflect the monthly reinvested interest during the years prior to redemption.
What might be a better way to record the purchase of Series I Savings Bonds (Ι Bonds), in Microsoft Money?
Unlike other investments where the interest is posted regularly to your account as interest, I Bond interest isn’t paid to the owner until maturity. It is also U.S. Government interest, which shouldn’t show up on your State and Local Tax returns, like regular interest.
Therefore, I have decided to assign the investment type as Bond >> Treasury Bond instead, so that not only will the bonds show up as investments, but I can manually update the value regularly, to account for the credited reinvested interest that compounds semi-annually. Otherwise your unredeemed $10,000 bond could still show up 10 or 20 years later, as still being worth only $10,000, when in fact it could be worth 2X – 3X that amount.
So, here is how I handled this special case:
BUY
Recording the purchase of I Bonds is pretty straight forward, and they’ll be designated as bonds, just as I do CDs, with a normal price of 100 (Money defines price as the percentage of par value). In my case, I’ve set up a TreasuryDirect investment account to hold all of my transactions with Treasury Direct.gov, but unlike most brokerage investment accounts, the Cash (transfer) portion will be the bank account that I’ve linked up, rather than the in-house brokerage Checking account*.
Example: (new) “BUY” of 10,000 “✰ U.S. GOVT SERIES I SAVINGS BOND (30 YR) ISSUE 1/1/2021”, @ 100 = $10,000, defining the investment details as:
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-
-
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- “Bond: Treasury Bond”, rather than “CD or U.S. Savings Bond”
- Interest Paid: At Maturity (it is actually at redemption though)
- Maturity Date: 1/1/2051
- leave Coupon Rate and CUSIP blank
- Memo: variable interest, reinvested and compounded monthly (contrary to what TreasuryDirect states), paid at redemption (anytime after 1 year up to 30 years; will lose 3 months interest if redeemed within the first 5 years)
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Now the bonds appear as investments in my Portfolio Manager screens!
MARKET VALUE UPDATES
Say the value at the end of the first year is 1.68% more, or $10,168. Instead of recording the “reinvested interest” posted to your bonds semiannually in your TreasuryDirect account (stated value will always be lagging behind by 3 months during the first 5 years), by manually updating the price instead (Common tasks > Update prices > Update prices manually…), the market value will be realistically reflected without any tax implications.
Calculate the price >> Price=(Value/Cost) 🆇 100
Example: Price on 1/1/2022 = 101.68, results in the value of this bond going into 2022 @ $10,168 – reflecting the 1.68% gain that the Treasury has posted.
SELL
The interest is usually recorded separately as either Investment Interest or as Reinvested Interest. However, I instead created a unique Investment Income sub-category “Treasury Interest“, which I assigned to:
-
-
-
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- Tax form “Schedule B”
- Form Line “U.S. government interest”
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-
-
, so that the Tax transactions for both T-bills and Savings Bonds are treated as State & local non-taxable income correctly.
Then, as an example, on the day of redemption 10 or 15 years from now, when the $10,000 bond value is @ 185 ($18,500), two transactions will be needed:
1. Record the interest as a separate investment activity, transferred to your “Cash” account, selecting “Other Income” as the activity. I discovered that this allows you to then specify a category (otherwise not possible), which in this case will be “Investment Income : Treasury Interest” (rather than the generic taxable Interest, although there is a possibility that Money would have handled this properly for the intended investment type).
Example: (new) “OTHER INCOME” of 10,000 “✰ U.S. GOVT SERIES I SAVINGS BOND (30 YR) ISSUE 1/1/2021” of $8,500, assigned to Category “Investment Income : Treasury Interest“.
2. If you elect to withhold federal taxes from your TreasuryDirect distributions (see Account Info tab down near the bottom), record this as a transfer from your “Cash” account, by selecting “Other Expense” as the activity, and “Taxes : Estimated Federal Income Tax” as the category.
3. Then in the actual redemption transaction, record the actual sale properly @ the selling value, but offset the interest as commission, so no Capital Gain is invoked (your gain is the interest already reported). I recently discovered a flaw in the “Tax Software” report if “Redeem CD/Bond” is selected, rather than “Sell”, as the entire amount of the bond is reported as interest, so I would stick with “Sell”.
Example: (new) “SELL” of 10,000 “✰ U.S. GOVT SERIES I SAVINGS BOND (30 YR) ISSUE 1/1/2021” @ 185 = $18,500, less Commission of $8,500.
or, since selling value is basically meaningless after cashing in the bonds, you could simplify this by using par value once again – same end result:
“SELL” of 10,000 “✰ U.S. GOVT SERIES I SAVINGS BOND (30 YR) ISSUE 1/1/2021” @ par (100)
Reconciling
When reconciling the redemption into your Cash account, be sure to match the deposit against the set of transactions described above (not just the sale transaction), although I find it easier to mark the set of transactions as cleared (ctrl-M), and simply accepting the downloaded deposit transaction as-is (marking it as void).
Gifted Bonds
If you wish to procure more than $10,000 worth of I bonds in any given year, you and your spouse can also buy each other multiple $10,000 I-bonds in your name as "gift holds", to be delivered in future years that you won't be purchasing your own $10,000 I bonds.
The cleanest method I can think of for handling gifted I-bonds:
When purchasing for a spouse, for example…
“BUY” 10,000 “✰ U.S. GOVT SERIES I SAVINGS BOND (30 YR) ISSUE 12/1/2021 🎁” @ 100, as a future gift hold. Memo: “gift hold I-bond for {spouse} to be delivered in 2023”
If you decide to deliver the gift bond from that spouse’s TreasuryDirect account into your account next year (January 2023)…
“Transfer In” 10,000 “✰ U.S. GOVT SERIES I SAVINGS BOND (30 YR) ISSUE 12/1/2021 🎁“. Memo: “bought in Daniel’s name as gift in {spouse}’s account (gift hold)”
If your gifted account still contains bonds the following year(s), repeat delivering a $10,000 bond in the same manner (along with it’s earned interest) to the recipient, until depletion.
Note: ▓ I-BONDS CAN BE REDEEMED AFTER 1ˢᵗ YEAR (in incremental amounts should you wish to limit the taxable interest in a given year; you will however relinquish 3 months of interest for that redeemed portion within the 1ˢᵗ 5 years). If you want to see a thorough video on how the interest is calculated, click here.
I hadn’t even considered purchasing I bonds, until reading an informative article written by Harry Sit a few days ago, for his blog The Finance Buff, entitled “Overpay Your Taxes to Buy I Bonds for a Better Yield Than TIPS”, which describes in detail, how a married couple can purchase $25,000 worth of I bonds annually. He later wrote another article “Buying I Bonds As Gifts”, to procure even more!
Here are some excerpts:
The U.S. government sells savings bonds directly to individual investors in small denominations. Series I Savings Bonds (“I Bonds”) are like a variable-rate flexible term CD. The interest rate goes up and down with inflation, but you’re guaranteed to match the rate of inflation, not lose to it. You can choose to hold I Bonds between one year and 30 years. Matching inflation with a flexible term is a much better deal than losing to inflation after committing to 10 years.
TreasuryDirect
Such a good deal is reserved only for small investors. The government doesn’t let you buy as much as you want. Each person is allowed to buy $10,000 per calendar year.
If you wish to procure more than $10,000 worth of I bonds in any given year, your spouse can also buy multiple $10,000 I-bonds in your name as "gift holds", to be delivered in future years that you won't be purchasing your own $10,000 I bonds.
You can only buy them directly on a government website called TreasuryDirect, not through a broker such as Vanguard or Fidelity. That means you can’t buy it with money in an IRA or a retirement plan account. The TreasuryDirect website isn’t the easiest to use, because the government doesn’t have much incentive to make it easier when it’s already offering a much better deal than what institutional investors are willing to pay. However, if you persevere, you’ll make it work in the end. If you’re married, the two of you have to open an account with TreasuryDirect separately. TreasuryDirect doesn’t have the concept of a joint account, although you can choose to put a co-owner on the I Bonds you buy. The two accounts can link to the same bank account. The government will debit purchases from your bank account and credit redemptions to your bank account. You pay federal income tax on the accumulated interest only when you sell. The interest is exempt from state income tax. IRS Direct Pay After you max out the $10,000 per person per year at TreasuryDirect, you can buy another $5,000 per year indirectly, but only if you’re due at least that much in tax refund and you tell the IRS to use part of your tax refund to buy I Bonds. You can’t send a check with your tax return and ask them to buy I Bonds for you. If you normally don’t have a tax refund that large, you can increase your tax refund by overpaying ahead of time. Because I’m self-employed and I pay quarterly estimated taxes, I just pay extra for the fourth quarter. If you don’t pay quarterly estimated taxes, you can make a one-time payment through IRS Direct Pay. After a year is over, you can still pay toward the previous year’s taxes with an automatic extension. When you say your payment is for an extension, the payment automatically files the extension. You don’t need to fill out another form. After you file an extension you get extra time but you don’t have to use it. You can still file your tax return on time before April 15.
The “I” stands for “inflation.” Series I bonds have an interest rate that’s indexed to the inflation rate. This means that your I bond is designed to keep pace with—or beat—inflation.
The composite rate is the annualized sum of:
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- a fixed interest rate, that lasts the life of the bond (currently zilch)
- plus a semiannual inflation rate (determined each May and again in November) on top of that
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To see a table showing the current composite rates, click on this TreasuryDirect link.
See my newly-added section describing my process for viewing present and future values of my entire inventory of bonds using their official calculator tool.
✰ U.S. GOVT Series EE Savings Bonds
[UPDATED 2/13/2021, 9/29/2022]
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U.S. Gov’t Series EE Savings Bonds are not indexed to inflation, and currently are at a dismal fixed rate of 0.10%, but since they have a unique guarantee that the value will double in value in 20 years, which equals a guaranteed return of 3.527% per year!!! , that is probably the ideal length of time to own these bonds (rather than the full 30-year term).
You are allowed to purchase up to $10,000 of I Bonds and $10,000 of EE Bonds per year, but if you aren’t willing/able to commit to 20 years, EE bonds currently aren’t a good investment.
As of Summer 2022, it is no longer enticing to invest in a 20-year product for a 3.527% return when I bonds are paying 9.62%, and therefore I cashed in the one EE bond I had purchased last year.
BUY
Recording the purchase of EE Bonds is pretty straight forward, and they’ll be designated as bonds, just as I do CDs and I Bonds, with a normal par of 100 (Money defines price as the percentage of par value). In my case, I’ve set up a TreasuryDirect investment account to hold all of my transactions with Treasury Direct.gov, but unlike most brokerage investment accounts, the Cash (transfer) portion will be the bank account that I’ve linked up, rather than the in-house brokerage Checking account*.
Example: (new) “BUY” of 10,000 “✰ U.S. GOVT SERIES EE SAVINGS BOND (20 YR) ISSUE 2/1/2021”, @ 100 = $10,000, defining the investment details as:
-
-
-
-
- “Bond: Treasury Bond”, rather than “CD or U.S. Savings Bond”
- Interest Paid: At Maturity (it is actually at redemption though)
- Maturity Date: 2/1/2041 (record as 20-years, even though actual maturity is in 30-years)
- leave Coupon Rate and CUSIP blank
- Memo: 3.527% APY, but ONLY if held at least 20 years (unique guarantee that value doubles); otherwise only 0.10% APY paid @ redemption ▓ REDEEM AFTER March 2041
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Now the bonds appear as investments in my Portfolio Manager screens! and I (or my heirs) are reminded not to cash-in early.
MARKET VALUE UPDATES
The dismal returns of 0.10% each year will add up very slowly, and the value at the end of the first year will be $10,010. Instead of recording the “reinvested interest” posted to your bonds semiannually in your TreasuryDirect account (stated value will always be lagging behind by 3 months during the first 5 years), by manually updating the price instead (Common tasks > Update prices > Update prices manually…), the market value will be realistically reflected without any tax implications.
Calculate the price >> Price=(Value/Cost) 🆇 100
Example: Price on 2/1/2022 = 100.10, results in the value of this bond going into 2022 @ $10,010 – reflecting the 0.10% gain that the Treasury has posted.
SELL
The interest is usually recorded separately as either Investment Interest or as Reinvested Interest. However, I instead created a unique Investment Income sub-category “Treasury Interest“, which I assigned to:
-
-
-
-
- Tax form “Schedule B”
- Form Line “U.S. government interest”
-
-
-
, so that the Tax transactions for both T-bills and Savings Bonds are treated as State & local non-taxable income correctly.
Then, on the day of redemption 2 decades from now when the Treasury makes a one-time adjustment to fulfill the “doubles in 20 years” guarantee, the $10,000 bond value is @ 200 ($20,000), two transactions will be needed:
1. Record the interest as a separate investment activity, transferred to your “Cash” account, selecting “Other Income” as the activity. I discovered that this allows you to then specify a category (otherwise not possible), which in this case will be “Investment Income : Treasury Interest” (rather than the generic taxable Interest, although there is a possibility that Money would have handled this properly for the intended investment type).
Example: (new) “OTHER INCOME” of 10,000 “✰ U.S. GOVT SERIES EE SAVINGS BOND (20 YR) ISSUE 2/1/2021” of $10,000, assigned to Category “Investment Income : Treasury Interest“.
2. If you elect to withhold federal taxes from your TreasuryDirect distributions (see Account Info tab down near the bottom), record this as a transfer from your “Cash” account, by selecting “Other Expense” as the activity, and “Taxes : Estimated Federal Income Tax” as the category.
3. Then in the actual redemption transaction, record the actual sale properly @ the selling value, but offset the interest as commission, so no Capital Gain is invoked (your gain is interest already reported). I recently discovered a flaw in the “Tax Software” report if “Redeem CD/Bond” is selected, rather than “Sell”, as the entire amount of the bond is reported as interest, so I would stick with “Sell”.
Example: (new) “SELL” of 10,000 “✰ U.S. GOVT SERIES EE SAVINGS BOND (20 YR) ISSUE 2/1/2021” @ 200 = $20,000, less Commission of $10,000.
or, since selling value is basically meaningless after cashing in the bonds, you could simplify this by using par value once again – same end result:
“SELL” of 10,000 “✰ U.S. GOVT SERIES EE SAVINGS BOND (20 YR) ISSUE 2/1/2021” @ par (100)
Reconciling
When reconciling the redemption into your Cash account, be sure to match the deposit against the set of transactions described above (not just the sale transaction), although I find it easier to mark the set of transactions as cleared (ctrl-M), and simply accepting the downloaded deposit transaction as-is (marking it as void).
* Note that if you are reinvesting within the TreasuryDirect account, simply enable “Track Cash transactions” in Settings, so that those bond redemptions and re-purchases are transferred to/from the virtual TreasuryDirect Cash account, rather than the linked Bank account, to avoid confusion and reflect reality.
Keeping track of your Saving Bonds values (EE and I)
[added 4/24/2023]
Manually updating the price (Common tasks > Update prices > Update prices manually…), the market value of each bond will be realistically reflected, but is there an easy method of presenting your portfolio of bonds, rather than looking them up individually in each of your TreasuryDirect accounts? Yes, there is.
I discovered a clever method to use the official TreasuryDirect calculator, that bypasses it’s limitations (including working in the Chrome browser and with electronic bonds):
- Install Android app “Savings Bond Calculator Plus” to your phone.
No data shared with third parties
No data collected and no ads
- Handles up to 20 accounts and 999 bonds
- Prices I-Bonds and EE-Bonds
- Provides handy summary information on active and cashed bonds per account
- Option for maturity and cashed year summaries
- Bond valuation based on official Treasury bond value tables
- Calculates current interest rate, average yield, next interest date, next interest payment
- Displays maturity date for active bonds and cashed date for cashed bonds
- Requires no device permissions
- Import from retired Treasury Savings Bond Wizard ™
- Import/Export to spreadsheets via .csv files
- Import/Export to current Treasury Savings Bond Calculator via .html files
- Setup your family’s accounts (including Gift accounts).
- Add in all of your bonds to their respective accounts (for bonds to be delivered as gifts, I add “Gift” to the serial # to help differentiate).
- Export the results to a file (I use “bonds.html”) accessible to your PC (I use Google drive) in html format (not csv). This will be the file you keep up-to-date with the app as you buy/sell bonds.
- Click on the header button of this file “Go to Savings Bond Calculator” to export your inventory into the official calculator tool (as a guest). Each time you click on the header button, a new tab will open with the same info, but by changing the “value as of” date, you can have several screens of data available to you for analysis. ⇓
- Your entire portfolio of bonds will be presented without logging in, and you will also be able to see future values for (up to) the next six months. ⇓
MICROSOFT MONEY OFFLINE 🔴 Ameridan's Blog 
I added the method I chose to treat “gifted” I-bonds (this special provision allows you to buy more than $10,000 worth of I-bonds in any calendar year). I’m not declaring it to be THEE method, but as you’ll see in my explanation, it works well for me.
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I added a sentence regarding reconciling the Sell transactions to prevent the interest getting added erroneously:
When reconciling the redemption into your Cash account, be sure to match the deposit against the set of transactions described above (not just the sale transaction).
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