However, for a few weeks in April and October, investors have a 12-month view, and that’s the case through April 28, the last day to get an electronic purchase of I Bonds completed this month. (Transactions take one business day to process.) Clients are typically able to buy bonds on the day they open their account, Keil said.

Because I Bonds are backdated to the start of the month, clients who invest now can get interest for all of April.

Tax Planning Needed
I Bonds earn interest for up to 30 years and federal income tax on all the interest can be deferred until redemption, something high-income clients find attractive. From a planning perspective, that means cashing the bonds must be carefully timed to avoid unnecessary tax pain. You don't want the interest to make more of the client’s Social Security taxable or to raise their Medicare Part B and Part D premiums, said Lawrence Pon, a CPA in Redwood City, Calif.

When the client passes away, interest until the death can be reported on the decedent’s final tax return, even if the bonds aren’t redeemed at that time. Otherwise, whenever the inheritor cashes them, he or she will be saddled with paying federal income tax on all the interest since the bonds were purchased. “Electing to report the interest on the decedent’s final tax return can make a lot of sense if the decedent is in a lower tax bracket than the inheritor,” Pon said.

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