In times of market turmoil, it’s important for many savers to find a safe asset that gives them steadiness and security. I Bonds are one way to do this, and the U.S. government backs them. When traditional choices like FDIC-insured accounts don’t inspire confidence, these securities that protect against inflation are a safe alternative.
By opening a TreasuryDirect account to buy Treasuries, people, and families can keep their cash flexible and protect it from possible bank runs. This article will go through how married couples, singles, and heads of households can save in I Bonds, as well as the maximum amounts they can buy in a calendar year.
I Bonds Overview
I Bonds are a type of bond issued by the U.S. Treasury that is meant to protect against inflation. They have two parts: a fixed interest rate and a rate that takes inflation into account. Together, these two parts make up the bond’s total return. I Bonds are backed by the full faith and credit of the U.S. government, so they are usually thought of as a safe long-term asset.
Using TreasuryDirect To Buy I Bonds
People must sign up for a TreasuryDirect account at www.treasurydirect.gov in order to buy electronic I Bonds. Once the account is set up, you can buy a maximum of the following number of electronic I Bonds per calendar year:
- Married couples: Each spouse can purchase up to $10,000 in electronic I Bonds for a total of $20,000.
- Singles and Head of Household can each buy up to $10,000 worth of electronic I Bonds.
- Singles and Head of Household: Each individual can purchase up to $10,000 in electronic I Bonds.
Buying I Bonds with Tax Refunds
Taxpayers can also spend a portion of their tax refund to buy paper Series I Savings Bonds. This can be done by completing IRS Form 8888, “Allocation of Refund,” and including it with your federal income tax return. (Form 1040). No matter how you file your taxes, you can only put up to $5,000 toward paper I bonds on your tax return each year.
Total Saving Potential for Married Couples, Singles, And Heads Of Household
Taking into account both purchases through TreasuryDirect and tax refunds, the most that can be put into I Bonds in a calendar year for each filing situation is:
- Married couples filing jointly: $25,000 (a total of $20,000 in electronic I Bonds acquired through TreasuryDirect and $5,000 in paper I Bonds purchased with a tax refund).
- Singles and Head of Household: $15,000 ($10,000 in electronic I Bonds acquired through TreasuryDirect and $5,000 in paper I Bonds purchased with a tax refund).
I Bonds are a good choice for people and families who want a low-risk asset that protects them from inflation. By combining TreasuryDirect purchases and tax refund allocations, married couples, singles, and heads of households can buy in I Bonds up to the limits set for their filing status. Remember that the limits and rules mentioned in this piece are as of April 2023, and they may have changed since then. This article is just for knowledge and shouldn’t be taken as financial or tax advice. Before making any investment choices, you should always talk to a professional financial advisor or tax professional.