Have a not-insignificant amount of I Bonds, which technically are in a taxable account. Thus, they are accounted for under Taxable Investment in my Mode 1: Asset Location by Account as "Bonds".
However, I'm not realizing the gains on an annual basis; I will pay the taxes on gains when/if they are redeemed at some point in the future.
I'd like to somehow get rid of the assumed income they are providing each year. Any way to do that?
Thanks.
I am in exactly the same position, and I use "windfall income". ("Other income" could work just as well.)
For each year's ibonds I have two entries on their year of maturity: one lists the (non-taxable) basis, the other the gain (total interest) with "taxable" checked. The latter is based on estimating inflation between now and maturity. It is a bit of a pain to set up, since I had to tabulate all my ibonds by year outside of Pralana; but now that they're in there it only require updating the taxable interest yearly on Jan 1st.
I use the Cleveland Fed site for estimated future inflation. I use treasurydirect for the current value of my ibonds. For each year of ibonds the calculation for their value at maturity is: current value of ibonds * (1+weighted real yield) ^ years to maturity * (1+ estimated inflation) - 1. That minus the initial purchase is the taxable interest. (This isn't exact of course, but close enough.)
FYI, the designers are planning on adding a module for individual bonds/ladders that hopefully will be able to work with ibonds too, modeled on how investment loans work now. So this all may change for the better in a bit.
