Savings Bonds - how to enter the interest when redeemed

[Mark Fields]

I track some savings bonds I have purchased withthe Savings Bond Wizard.  

I purchased 9 Savings bonds at an issue price of $25 each.  In 2002 I entered each bond by serial number Intestment Account within Money that I named "Savings Bonds" and entered each bond serial number as an investment.  Only the Issue price shows.

I redeemed them today at the bank and the redemption values the bank paid matched the Savings Bond Wizard.   How do I enter the interest earned at redemption?  As interest?

I had the Savings Bonds Redeemed (total value, Issue Price and Interestt) transferred into another account at the bank.  I know I will get a 1099-INT from the bank next year.

Mark Fields

PS - I searched google, 

http://littlegreengecko.com/MSMstuff/faq#Q42 

http://moneymvps.org/faq/AtoG.aspx

but didn't see anything.

[Dick Watson]

I have some long-ago EE SBs as investment type "CD or U.S. Savings Bond" with qty the issue $ value, not face value. When I redeem them, at the magic 30-year mark, I do a transaction "Redeem CD/Bond" with the redemption amount. So, a $100 bond from 1991 is a 50 qty purchase and, last spring, a $207.36 redemption of qty 50. Money automagically solves for interest and implicitly tracks this as interest income, but there is no place to enter an explicit category for this income.

You can control the association of these "implicit categories" (a category associated with some cash income or expense that is a side effect of what is otherwise an atomic investment transaction, e.g., a capital gain from a sale) with some of the Investment Transaction types, but not Redeem CD/Bond, from Settings | Investment Settings | Investment Categories. What you can't control is what Money does with them. I've never fully chased it down, but these implicit categories are, I believe, reported in some places and not in others. See, for instance, some of the tax and investment reports, e.g., Tax-Related Transactions. But, Transaction reports, IIRC, won't show this implicitly assigned category.

Two graphic reinforcements:

Aloha and stay safe out there,

Dick

[Ameridan (microsoftmoneyoffline.wordpress.com)]

Dick, I have this covered in my article, but perhaps you missed it.  You can create a subcategory "Treasury Interest that can then be mapped to:

• Tax form “Schedule B”
• Form Line “U.S. government interest”

https://microsoftmoneyoffline.wordpress.com/2021/01/16/u-s-series-i-savings-bonds/#EE 

[Dick Watson]

I hadn't looked for it, TBH.

Agreed, you document another valid, and maybe better overall, way to treat Savings Bonds.

FWIW, and for those interested in solutions to Savings Bond tracking in MSM, I didn't mention in this post (maybe it's in my FAQ SB answer? don't remember...), but the one other addition to what I've done with my SBs is that I annually update a transaction, one per each investment, which corresponds to each bond issue date, of a Reinvest Interest date/amount for the current value less issue price as quoted by treasurydirect.gov. (I migrated out of the SB Wizard and paper bonds back in 2009.)

So, for each of these bonds, the life cycle in Money is/was: 1) Buy purchase price units of a CD type Investment unique to that issue month (e.g., "US $100 EE bond -- 95-09"). 2) Add a transaction for each bond (or, I suppose, each set of bonds of same issue date but I never had that case) to update as often as I felt necessary, annually, the current "Reinvest Interest" amount to get the investment position value to current redemption value, 3) keep updating those reinvest transactions, until 4) Redeem CD/Bond at redemption amount and delete its no longer necessary Reinvest Interest value tracking transaction. (FWIW, back when I was buying the bonds, there was a cash account that collected "workplace savings" transfers each paycheck until the balance got large enough to buy one. That account was the cash source for the Buy Investment/CD transfer. There was also a Transfer Out/Transfer In cycle when i moved the bonds from paper and SB Wizard to TreasuryDirect.)

Key disclaimer: I have never been big into SBs; my high-water-mark holding was only 37 bonds; 31 remain. They aren't even a minor part of my investment strategy. (Back in the day, my employer was big into flying the Treasury Minute Man flag which required they get a certain percentage of us in "Workplace Savings," so they "encouraged" it, annually. I played along at a level that purchased one or two of the smallest denomination bonds per year +/-.) As long as I hold them all until maturity, I'll never redeem more than two in a year. So, my need to get the interest reported by Money is basically nil. (I also make next to no use of Money's native tax reporting anyway. I make lots of use of my MoneyLink alternative and Favorited Reports exported to Excel. Two savings bond interest transactions per year of <$200 total is the least of my data collection problems come tax time.)

The only drawback, for me, of how I did this is that the performance-over-time reporting is worthless and it shows a big (by the size of the account which is insignificant in my bigger picture) income bump once a year at the Reinvest Interest transaction date, which is the as-of date I grab the bond values from TreasuryDirect. So, for me, it's been lightweight in execution and "good enough" for purpose.

[Ameridan (microsoftmoneyoffline.wordpress.com)]

7.12% is the going rate for I-bonds, and next month they'll probably announce a similar rate.  I'll keep them until inflation is nil again, but bonds aren't so bad right now.