How To Buy A Savings Bond For A Child
Savings bonds are considered safe, straightforward financial investments that earn interest over time. An added perk is that minors can hold them in their name, making them excellent gifts for kids. Whether you're a parent, relative or family friend, purchasing a savings bond for a child can unlock a nice payout for them later down the road. It's also a simple opportunity to teach them about the benefits of investing.
how to buy a savings bond for a child
Savings bonds are issued through the U.S. Treasury and insured by the federal government. You can purchase them for as little as $25 or for as much as $10,000. When you buy a savings bond, you're essentially lending money to the government to be paid back at a later date. In the meantime, interest can accumulate for up to 30 years. You can technically cash in a savings bond one year after buying it, but you'll have to wait at least five years before cashing in to receive all the accrued interest.
Note that purchasing limits do apply. Within a given calendar year, you can buy up to $10,000 in electronic Series I bonds, $5,000 in paper Series I bonds, and $10,000 in Series EE bonds. It's also worth mentioning that these numbers exclude any savings bonds that are purchased as gifts.
You'll first want to determine how much the bond is worth. You can use this savings bond calculator for paper bonds, which can be redeemed at most financial institutions. Just be sure to bring proof of identification. You can log in to your TreasuryDirect account to see the value of electronic savings bonds and redeem them (if you're ready). Once redeemed, the cash value will be deposited into your checking or savings account within a couple of business days.
There are some additional steps to take if redeeming a savings bond for a child. If it's a paper bond, the parent must write both their name and the child's name on the back of the bond. They'll also need to put in writing that they are indeed the child's legal guardian. (The Treasury requires guardians to use specific language.)
Alternatively, they can fill out this form, which may require a certified signature, and send it directly to the Treasury. For electronic savings bonds, parents can create a TreasuryDirect account for their child and link it to their own account, then redeem bonds as they wish.
You can easily buy savings bonds online at TreasuryDirect.gov. They can be put in your own name or the name of the child for which they're being purchased. If the savings bond is to be a gift, be prepared to provide the child's full name and Social Security number. The recipient must also have their own TreasuryDirect account. If not, you have the option of holding the gift in your account until one is established for them. You can purchase anywhere from $25 to $10,000 in gift bonds.
While returns are generally less robust compared with higher-risk securities like stocks, savings bonds can be good starter investments for children. The stronger your financial health, the better positioned you are to explore these options. Strong credit is a key part of financial wellness; you can check your credit score and credit report at Experian at no charge to see where you stand.
For electronic savings bonds as gifts, both you and the recipient must have a TreasuryDirect account. TreasuryDirect is the official United States government application in which you can buy and keep savings bonds.
You can gift a savings bond to adults or children. A child under 18 can have a TreasuryDirect account if the child's parent or other adult custodian has a TreasuryDirect account and sets up a linked account for the child.
This page focuses on buying for yourself or a child whose account is linked to yours. If you are planning to give a savings bond as a gift, also see our page on Giving savings bonds as gifts. You can print a certificate announcing your gift. See our selection of announcement cards.
In any one calendar year, you may buy up to $10,000 in Series EE electronic savings bonds AND up to $10,000 in Series I electronic savings bonds for yourself as owner of the bonds. That is in addition to the amount you can spend on buying savings bonds for a child or as gifts.
The money your employer sends each time goes into a special Payroll Savings Plan Certificate of Indebtedness (C of I) in your TreasuryDirect account. Every time the balance in that specific C of I is large enough to buy the bond you chose at the amount you chose, we issue you that type of savings bond for that amount.
For example: If you want to buy $50 Series I savings bonds and you ask your employer to send $25 from each paycheck to your TreasuryDirect account, we issue a $50 bond for you after every other payday. You don't have to think about it again or do anything else. You keep getting more savings bonds automatically until you change or end your Payroll Savings Plan.
We may issue multiple bonds to fill your order. The bonds may be of different denominations. We use $50, $100, $200, $500, and $1,000 bonds. Again, the amount of your purchase can be any multiple of $50, from $50 to $5,000. You need to tell us only the amount. We determine denominations.
On Form 8888, you also specify who will own the bonds. That means, you can give paper savings bonds to yourself or to anyone else (as a gift). If you have enough money in your refund, you can buy multiple bonds and, if you wish, you can give them multiple registrations.
Yes. Stocks can be given to a recipient as a gift through transferring a stock certificate, or through a broker, allowing the recipient to benefit from any gains in the stock's price."}},"@type": "Question","name": "What Is a Gift Tax?","acceptedAnswer": "@type": "Answer","text": "Gift tax is a tax on the transfer of property by one individual to another where the donor receives nothing, or less than full value, in return. For 2022, the annual exclusion is $16,000, and it increases to $17,000 for 2023.","@type": "Question","name": "Can I Buy Savings Bonds Online?","acceptedAnswer": "@type": "Answer","text": "Yes. You can purchase a digital savings bond as a gift through the TreasuryDirect website, a secure, web-based system operated by the U.S. Department of the Treasury."]}]}] Investing Stocks Bonds Fixed Income Mutual Funds ETFs Options 401(k) Roth IRA Fundamental Analysis Technical Analysis Markets View All Simulator Login / Portfolio Trade Research My Games Leaderboard Economy Government Policy Monetary Policy Fiscal Policy View All Personal Finance Financial Literacy Retirement Budgeting Saving Taxes Home Ownership View All News Markets Companies Earnings Economy Crypto Personal Finance Government View All Reviews Best Online Brokers Best Life Insurance Companies Best CD Rates Best Savings Accounts Best Personal Loans Best Credit Repair Companies Best Mortgage Rates Best Auto Loan Rates Best Credit Cards View All Academy Investing for Beginners Trading for Beginners Become a Day Trader Technical Analysis All Investing Courses All Trading Courses View All TradeSearchSearchPlease fill out this field.SearchSearchPlease fill out this field.InvestingInvesting Stocks Bonds Fixed Income Mutual Funds ETFs Options 401(k) Roth IRA Fundamental Analysis Technical Analysis Markets View All SimulatorSimulator Login / Portfolio Trade Research My Games Leaderboard EconomyEconomy Government Policy Monetary Policy Fiscal Policy View All Personal FinancePersonal Finance Financial Literacy Retirement Budgeting Saving Taxes Home Ownership View All NewsNews Markets Companies Earnings Economy Crypto Personal Finance Government View All ReviewsReviews Best Online Brokers Best Life Insurance Companies Best CD Rates Best Savings Accounts Best Personal Loans Best Credit Repair Companies Best Mortgage Rates Best Auto Loan Rates Best Credit Cards View All AcademyAcademy Investing for Beginners Trading for Beginners Become a Day Trader Technical Analysis All Investing Courses All Trading Courses View All Financial Terms Newsletter About Us Follow Us Facebook Instagram LinkedIn TikTok Twitter YouTube Table of ContentsExpandTable of ContentsFinancial GiftsFAQsThe Bottom LineBudgeting & SavingsSavingsGreat Financial Gifts for Kids for the HolidaysBy
Yes, you can. When you file your tax return, you can tell the IRS you want to save part or all of your refund and have the rest sent to your checking account. You can save part or all of your refund by submitting Form 8888, Allocation of Refund (Including Savings Bond Purchases)PDF when you file your return. Follow the instructions on Form 8888 to tell the IRS to make a direct deposit of the amount you designate to an IRA, to buy U.S. savings bonds, to make a direct deposit to a savings or checking account or other savings vehicles, or to request a paper check.
No, you don't need to open an account in advance with the Treasury Department. Complete and file the Form 8888 with your tax return. The IRS will arrange for your U.S. savings bonds to be mailed to you.
No, you don't need to have a bank account to purchase I bonds with your federal tax refund. If you purchase I bonds with your tax refund, you can elect to have any remaining refund amount not used to purchase bonds mailed to you as a paper check. 041b061a72