Tax Break: The TurboTax Blog » Savings Bonds

Surprise Your Significant Other This Valentine’s Day

Jaime Mejia — Wed, 13 Feb 2013 19:29:45 +0000

Nobody ever said that Valentine’s Day gifts have to be limited to the typical box of chocolates or flowers. While there is nothing wrong with those presents, have you considered giving a gift that carries a powerful message on personal finances?

Valentine’s Day could be the perfect occasion to give your significant other the gift of savings and investing to help improve their personal finances.

So how do you turn the unsexy idea of saving and investments into a Valentine’s Day gift?

Give Savings Bonds. Savings bonds can be purchased as gifts for your Valentine and many purchasers save for their children’s education. Just in time for Valentine’s Day, you can turn tax time into savings and giving time by using a portion of your tax refund to buy U.S. Savings bonds.

Sold in denominations of as little as $50, Series I bonds, the type available for purchase through TurboTax, are available to every taxpayer who receives at least $50 in tax refunds. You can use a portion of your tax refund to buy bonds for your loved one and have the remainder deposited into a bank account or pre-paid debit card.

Gift shares. Websites like www.oneshare.com allow you to acquire shares from a company that reflects the style and interests of the person that will receive the gift. Giving shares as a gift is meaningful: your significant other will become a shareholder and will be inspired to learn more about the company, its rate of return, and even its upcoming new product launches.

Open a mutual fund. You can open a mutual fund account on behalf of your significant other. Secure all the information needed and give them a letter with next steps, so they will only need to fill out the personal information section and sign to complete the process. Keep in mind that in order to open a mutual fund account, most investment companies require a minimum deposit of between $1,000 and $3,000. However, if you go the extra mile and provide your loved one with the money to open the fund, you will change their financial life by helping them become a real investor and encouraging them to keep contributing to that account.

Buy an ETF. You could open an account for your loved one by buying shares of an Exchange Traded Fund (ETF). ETFs are like mutual funds that are divided into shares; those shares are traded in the stock exchange like other company’s shares would be. ETFs are attractive because shares can be acquired with a relatively small investment (between $100 and $200). Fidelity Investment, an investment company, offers you the opportunity to open an account when you buy an ETF share. Fidelity offers 30 different ETFs that can be bought without having to pay a commission.

Give A Book. A book on finances could also be a great gift to your significant other, inspiring them to improve their personal finances. There are a lot of finance books, so look for one that contains real and simple solutions to common problems on personal finances.

Saving is Hard. Bonds Make it Easy

TurboTaxBlogTeam — Mon, 11 Feb 2013 17:57:51 +0000

Hardworking Americans and their families can turn tax time into savings time by using a portion of their tax refund to buy U.S. Savings bonds.

Setting aside a small amount of money in a safe place allows people to manage unexpected events, opens up opportunities for education and helps families build future financial security.

Tax time is the ideal time to think about saving. Lower-income families, especially those eligible for tax credits, can receive tax refunds that amount to as much as 20% of their annual incomes. For many, tax time is the only time all year that they can save money.

“Buying a U.S. Savings Bond with your tax refund is an easy way to start saving”, said Bernie McKay, director of The American Tax & Financial Center at TurboTax. “You only need $50 to get started and you’ll earn interest so your money starts growing immediately. Tax time is the perfect time to get your financial house in order and jumpstart saving for the future for you and the people you care about.”

Why Series I Bonds?

U.S. Savings Bonds are a simple and versatile savings opportunity for average American working families.

Sold in denominations of as little as $50, Series I bonds, the type available for purchase through TurboTax, are available to every taxpayer who receives at least $50 in tax refunds. Taxpayers can use a portion of their tax refund to buy bonds and have the remainder deposited into a bank account or pre-paid debit card.

Savings bonds can be purchased as gifts for others, and many purchasers save for their children’s education.

SaveYourRefund Sweepstakes

The SaveYourRefund Sweepstakes makes taxpayers a winner this tax season with chances to win $250 in weekly drawings or a grand prize of $25,000 by saving just $50 of their federal refund! Beginning February 1, 2013 and running through April 15th, 2013, all U.S. Citizens and legal residents over age 18 that are due a federal tax refund can save a portion of that refund using IRS Form 8888 and enter the sweepstakes.

The Sweepstakes, offered through Doorway2Dreams, a non-profit organization committed to improving the financial lives of Americans. will award multiple weekly prizes of $250 and all entrants will be eligible for a chance at winning the $25,000 Grand Prize. Visit http://www.SaveYourRefund.com to submit your entry.

Everyone at TurboTax is proud to help our customers and their families save for their futures. In fact, TurboTax has been a significant contributor to tax-time savings. Over the past three years, more than 75,000 tax filers have purchased U.S. Savings Bonds and accumulated more than $40 million for themselves and their loved ones.

Sorprenda en el día de san Valentín

Jaime Mejia — Mon, 04 Feb 2013 19:14:06 +0000

En Ingles

Nadie dijo que el regalo de San Valentín tiene que ser una típica caja de chocolates o unas flores. Y no hay nada de malo con esos obsequios. ¿Qué te parece un regalo con significado que contenga un mensaje poderoso de finanzas personales?

El día de San Valentín puede ser la ocasión perfecta para darle a esa persona especial un regalo que le ayude a ahorrar, invertir y mejorar sus finanzas personales.

¿Cómo convertir la idea de ahorrar e invertir en un regalo para el día de San Valentín?

Regale bonos de ahorro. Bonos de ahorros pueden ser comprados como regalo para tu ser querido, y es más muchas personas los usan para ahorrar para la educación de sus hijos. Justo para el día de San Valentín, puedes aprovechar el tiempo que pasas completando tus impuestos para comprar regalos, utilizando una porción de tu reembolso de impuestos para comprar Bonos de Ahorros de los EE.UU.

Los bonos Serie I se venden en denominaciones tan pequeñas como $50 dólares, los cuales pueden ser comprados a través de TurboTax. Estos están disponibles para cualquier contribuyente que reciba como mínimo $50 dólares en su reembolso de impuestos. Puedes usar una porción de tu reembolso para comprar bonos para tu ser querido y depositar el resto en una cuenta bancaria o en una tarjeta débito pre-pagada.

Regala la acción de una empresa. Sitios de Internet como www.oneshare.com te permiten adquirir acciones de alguna empresa cercana a los gustos o intereses de la persona a quien quieras enviarle el obsequio. Regalar una acción está cargado de significado: tu ser querido se convertirá en accionista y tendrá el estímulo de empezar a interesarse por lo que hace la empresa, su rentabilidad y hasta los productos nuevos que lanzará en el futuro.

Abre un fondo mutuo. Puedes abrir un fondo mutuo a nombre de tu ser querido. Tendrá que buscar la información y entregar una carta de instrucciones para que la persona finalice el proceso con la firma y datos personales. Ten en cuenta que la mayoría de las compañías de inversión requieren de un depósito mínimo de entre $1,000 y $3,000 para abrir un fondo mutuo. Sin embargo, puedes ir un poco mas allá y darle a tu ser querido el dinero para abrir el fondo. Un regalo de este tipo cambiará la vida financiera de la otra persona porque se convertirá en inversionista de verdad y tendrá un estímulo real para continuar aportando a esa cuenta.

Compra un ETF. Puedes abrir una cuenta para tu San Valentín con la compra de una acción de ETF (Exchange Traded Funds). Los ETF son como fondos mutuos que se dividen en acciones y las acciones se negocian en la bolsa como la acción de cualquier empresa. El atractivo del ETF es que se puede comprar una acción por una cantidad relativamente pequeña (entre $100 y $200). Fidelity Investments, empresa de inversiones, ofrece la posibilidad de abrir una cuenta con la compra de una acción de un ETF. Fidelity ofrece 30 ETF que se pueden comprar sin pagar comisión.

Regala un libro. Un libro de finanzas también puede ser una opción para darle a tu ser querido ideas de cómo mejorar sus finanzas personales. Hay muchos libros de finanzas. Trata de buscar uno que ofrezca soluciones reales y simples a los problemas más comunes de finanzas personales.

Jaime Mejia es graduado de periodismo de la Universidad Central de Bogotá en Colombia. También cuenta con una Maestría en economía de la Universidad Javeriana en Bogotá y un MBA de la Universidad del Sur de California en Los Ángeles. Su pasión es el periodismo de negocios, economía y finanzas personales. Vive en Estados Unidos desde 2000. Es periodista free-lance y tabaja como columnista de finanzas personales para el HuffPost Voces y para la Associated Press. Puedes leer más de sus artículos a través de http://voces.huffingtonpost.com/jaime-mejia.

History of U.S. Savings Bonds

TurboTaxBlogTeam — Mon, 08 Mar 2010 19:21:32 +0000

It’s rare these days when someone hasn’t heard of U.S. Savings Bonds. It’s even rarer when someone under the age of 60 owns them. But it an economy like the one we’re living in now, U.S. Savings Bonds are making a comeback at time when folks are looking for easy and safe ways to invest in an ever-changing market. The President announced that tax refund-receiving Americans will have the option of buying Savings Bonds at tax time. TurboTax is providing customers with easy ways to put their refund automatically toward the purchase of Savings Bonds. If U.S. Savings Bonds are making a comeback, certainly there are a few good reasons. Here’s a brief history of Savings Bonds.

Savings Bonds seem to be the investment of choice by those old enough to remember what Dwight D. Eisenhower sounded like over a black and white television with the screen the size of a cereal box, that’s because this particular investment was the overwhelming choice of their radio-listening parents in an era in which investing with the government was not only fashionable, it was both lucrative and safe.

How To Pay For a World War

If one’s familiarity with Savings Bonds stems from a vague childhood memory of a “Buy War Bonds” poster on the wall of an antique shop, that’s because they were the government’s primary means of financing World War I. With the ability to borrow funds from other countries nearly non-existent at the time, the government resorted to two primary strategies to pay that hefty tab: raise taxes, and borrow money from taxpayers.

That borrowing occurred in the form of issuing bonds, which became known first as Liberty Bonds, and later as U.S. Savings Bonds. While those specific issues have long since been redeemed, the market still contains significant quantities of bonds issued as recently as 1980, much of that capital being held by other countries.

A Breadth of U.S. Treasury Financial Instruments

In 2002 the government largely shut down marketing efforts for U.S. Savings Bonds, but there are literally billions of dollars worth still out there, accruing very viable interest that compares to that of other government securities in terms of return, as well as safety. The government continued to issue Series EE bonds, though demand is dwindling as other U.S. Treasury backed vehicles offer more options with equal safety.

The humble U.S. Savings Bond today competes for mindshare with tradable U.S. Treasury securities with shorter maturities, such as Treasury Bills and Treasury Notes. Savings Bonds, on the other hand are issued to a single investor and are not transferrable or tradable within secondary markets, though the holder does have the option of redeeming the bond prior to the stated maturity date, which is 30 years after original issue.

The Accrual of Interest

These bonds are issued with a face value that is discounted below par value (face value upon maturity) by an amount specified by the government. The amount is set at a level to attract investors without overpaying in comparison to other short-term financial instruments. There are both variable and fixed interest rates out there, with the varible rates adjusting at redemption to reflect the current market. Depending on the specific type of U.S. Savings Bond held – there are three of them – interest accrues to the bondholder either annually or semi-annually.

Taxing Interest in U.S. Savings Bonds

Bondholders actually take taxable possession of interest in one of two ways: upon redemption at a date prior to maturity, in which case the amount received reflects the interest that has accrued to that date (redemption value minus issued value = interest accrued), or upon maturity, when the full face value of the bond is paid (the same formula applies here, as well).

Taxation depends on whether the bondholder has elected to account for the interest on an accrual basis, in which case they are taxed on the amount of interest accrued in a specific tax year, or upon either redemption or maturity, in which case the entire amount of interest that has accrued since original issue is taxable in that specific year.

Once the bondholder has selected one of these options – the vast majority opt for the latter – they must report interest in that same manner throughout the life of their ownership of the bond. Interest in U.S. Savings Bonds are taxable at the Federal level only.

U.S. Savings Bonds come in three flavors, learn more about the Series I bond, Series EE bond, or Series HH bond (no longer issued by the U.S. Treasury).

The government also pegs interest rates on U.S. Savings Bond to compete with long-term savings accounts. However, if the return on a Bond is fixed, the bond must be compared directly against the option of a savings account, which may entail a penalty for early withdrawal. Bonds redeemed prior to maturity are subject to no such penalty.

How about you? How will you make the most of your tax refund?