In this guide, I’ll show you how to buy more I Bonds than the annual purchase limit. While each person can only buy $10,000 in I Bonds per calendar year, there are many ways to get around this limit.
I Bonds have been extremely popular recently and my post advising people to buy risk-free I Bonds because they offer high interest rates have been a runaway hit. It’s not hard to see why. Where else can you invest your money and get a 9.62% APY return safely?
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I Bonds $10,000 Limit
As of 2022, each person is limited to purchasing $10,000 worth of I Bonds in a single calendar year.
The $10,000 limit has been in effect since 2003. Prior to that, one was able to purchase a maximum of $30,000 annually – $15,000 in paper I Bonds and another $15,000 in electronic I Bonds via the TreasuryDirect site.
That was a sweet time period since a couple could purchase a total of $60,000 and that’s exactly what I helped my parents do back then (a couple could buy another $60,000 in EE Bonds too, although EE Bonds aren’t relevant anymore).
Today, paper savings bonds are no longer available (with one exception I’ll discuss below) and the limit for electronic savings bonds is capped at $10,000 annually.
If you’re reading this, you’re probably wondering if there are ways around this purchase limit. I don’t blame you. There are no other investment alternatives that provide a 9.62% APY return with zero risks.
Luckily, there are ways to buy more I Bonds and I’m listing all the options here for you. So let’s get started and learn five ways to buy more than $10,000 in I Bonds!
5 Ways To Buy More Than $10,000 in I Bonds
1. Overpay Your Taxes
You can buy an additional $5,000 in I Bonds if you elect to get your tax refund in I Bonds. This will increase your individual limit from $10,000 to $15,000 per calendar year. You’ll also get them as paper bonds and is the only way left to get them in paper.
Typically, you don’t want to (or should) overpay taxes so much to get a refund of this size. Why let Uncle Sam borrow your money tax-free? But if you want to buy more than $10,000 in I Bonds in a single year, this is a sound strategy.
For self-employed individuals, you can just overpay your estimated quarterly taxes. For W-2 employees (those who work for a company), you can elect to pay additional federal taxes on top of what you normally pay.
Some companies let you do this by yourself through the their payroll system while others require you to complete a new Employee Withholding Certificate (IRS Form W-4).
To calculate how much you want to overpay taxes by, simply calculate how much extra I Bonds you want to buy and divide it by the number of paychecks you receive in a year.
For example, if you want $5,000 in I Bonds and get paid once every two weeks, you’d need to withhold an additional $192.31 per pay period to “overpay” $5,000 ($192.31 x 26 pay periods).
Then when you do taxes at the end of the year, instead of getting a $5,000 refund in cash, you can use it to purchase the additional I Bonds.
Note that if you have a spouse and you’re filing taxes with the status of “married filing separately”, then your spouse will also have the opportunity to buy $5,000 in I Bonds. I recommend consulting a tax advisor before going this route though as you could lose advantages associated with “married filing jointly”.
2. Purchase I Bonds Under Your Spouse’s Name
I alluded to this earlier when I mentioned buying I Bonds as a couple. If you have a spouse, each of you can purchase $10,000 in your own name since the annual limit is tied to the primary owner’s Social Security Number.
This is easier than figuring out how much to overpay taxes by, unless you plan to buy more than $20,000 a year between the two of you.
3. Buy I Bonds Through Your Kids
Yes, you can buy in your kid’s name too, but there are some important caveats.
First, when I say kids, I mean any children under 18 years old. Adult children are adults – they can buy I Bonds in the same manner as any other adult. If they don’t have the spare cash, you can give them money to help them buy I Bonds or you could also buy it for them using the gift strategy (more on that later).
When you buy I Bonds in your child’s name, that money belongs to your child. You’re opening a custodial account and acting as the custodian. That means you can’t take the money back or reinvest it into something that doesn’t directly benefit your child.
I know, I know… you were probably thinking about the same potential loophole as me:
“Let me ‘borrow’ my kid’s Social Security Number to buy more I Bonds and cash it out later for my own spending and investments.”
It may sound brilliant, but don’t do this! If there’s one entity you don’t want to mess with, it’s the government.
When you open an account in the name of your child, you represent to the government you’re giving an irrevocable gift to your child. When you cash out the bonds, you represent to the government you’ll spend the money specifically for the child’s benefit. Making false statements to the federal government is a crime and can be prosecuted.
The other negative of buying an I Bond in your kid’s name is that the interest is taxable even if the bonds are used for their college expenses. Interest is only tax-free when the bonds are under a parent’s name (and high-income families are excluded due to the qualifying income limit).
If you’re truly intending to invest for your child, I recommend opening a 529 plan rather than a custodial account. Those plans receive favorable tax treatments and the ability to invest in stocks will outperform I Bonds over the long run.
4. Buy I Bonds With Your Business Entity
This is my favorite way to get around the $10,000 I Bond limit. Many people qualify purchasing bonds with this method and they don’t even know it.
That’s because a lot of people have small businesses. Your side hustle is considered a business too. Do you…
- sell things online?
- drive for Uber, Lyft, or another ridesharing service?
- walk dogs with apps like Rover?
- rent extra space inside or outside of your home with Neighbor?
- rent your house or rooms in your house on AirBnB?
You don’t need a complicated business structure either. A large number of people run their businesses as a sole proprietorship with a fictitious name (“DBA” or “doing business as”) or as a single-member LLC.
In fact, many people that engage in side hustles don’t even register as an LLC. They just report the income on Schedule C of their personal tax returns. You’re a sole proprietorship in this instance, which is still considered a business.
The most important proof is that the business exists separately from the owner. To make it more obvious, it’s probably wise to register a fictitious business name (“DBA”) in your city and/or get a free EIN from the IRS.
While you’re at it, you can open a business checking account to further draw the line of separation between you and your business. I opened a Chase business checking account for this purpose (which offers a $300 welcome bonus).
5. Gift I Bonds
One of biggest hacks is that you can gift I Bonds with no purchase limit.
While the recipient can only buy or receive a total of $10,000 in I Bonds during a single calendar year, you can use gifting as a strategy to lock in the current interest rate offered. The gifted bonds will just sit in your “gift box” until the intended recipient chooses to receive the funds.
Let’s run through an example:
John and Jane are a married couple and each of them has already bought $10,000 in I Bonds for 2022. John can buy an additional $10,000 (or whatever amount) during 2022 with the gift being fully executed (“received”) to Jane in 2023.
Since John bought the I Bonds in 2022, the savings bonds will begin accruing interest and counting down the 12-month lock-up period at the time of purchase.
Since Jane elects to receive the bonds in 2023, she has to deduct that bond amount against her annual limit. Alternatively, she could also defer receiving the gifted bonds to a later year. If Jane does this, she can buy more bonds for herself in 2023.
In the above scenario, Jane could also buy $10,000 in bonds as a gift to John.
You probably don’t want to gift an exorbitant amount of I Bonds though – maybe a few years at most. It will take the recipient a long time to unwind a huge volume of gifted bonds and inflation in the U.S. should hopefully cool off before then.
If that happens, the variable rate of I Bonds would go down by a similar margin. Then you’d be in a situation where the recipient will earn a high rate today, but a potentially very low rate in the future. You don’t want years of bonds that need to be unloaded $10,000 at a time.
I think buying an extra $10,000 as a gift to lock in the current rate of 9.62% with the intention to “receive” it next year is a very smart idea. Even buying $20,000 worth of I Bonds and executing the gift for 2023 and 2024 makes sense. Anything further out than that is too cloudy for me to feel confident in buying more.
Last thing I want to mention is that if you’re doing this with anyone other than your spouse, you may be required to file a gift disclosure to the government (IRS Form 709) depending on the total amount.
Ninja Note: You can only gift or receive I Bonds to and from your personal TreasuryDirect account. Gifting doesn’t work with business accounts or trusts.
The Bottom Line
I hope you found this guide useful and that one of the ways to buy more I Bonds is applicable to your situation.
This was an analysis I originally did for my own situation. I had previously bought $20,000 in I Bonds ($10k for me, $10k the wife) at the end of 2021 and another $20,000 this year. The interest rate offered on these is too good to pass up and I wanted to see if there were legit ways to purchase more.
I ended up buying additional bonds under my company and using the gift trick.