Thank you for that in formation, Mel.Mel Lindauer wrote: ↑Mon Jul 11, 2022 12:03 amA number of forum members have reported success at doing this (and buying even more with multiple trusts).AlphaLess wrote: ↑Sun Jul 10, 2022 8:29 pm
Thank you for the very useful post with very useful links!
Related to the article by "The Finance Buff".
In that article, author Harry Sit, suggests that a married couple with sole proprietorship business and trust (each) can buy up to $65K of I-Bonds per year between the two of them.
$10K for A as individual
$10K for B as individual
$10K for A's business
$10K for B's business
$10K for A's trust
$10K for B's trust
$5K from tax refund
Putting aside the last $5K, how reliable is the information about buying additional $40K (between A and B) for their trusts and their sole proprietorships?
TY
In researching the approach, I see this from a CNBC article:
https://www.cnbc.com/2022/05/14/how-to- ... -year.html
"That means that even if you’re self-employed and file taxes on an IRS Schedule C as a small business, you can purchase up to $10,000 I bonds annually for that business. This purchasing power also applies to living trusts, through which people can purchase an additional $10,000 in I bonds per year."
Thank you, Mel. Do you know if there are more technical write-ups?
For business, we don't file on Schedule C, but rather, Schedule E (both of us do).
Schedule E says: "For rental real estate, royalties, partnerships, S corps, estates, trusts, etc".
Would you happen to know how is that different?
Separately, there is an additional element that I-bonds have that make them desirable from asset allocation point of view, and that relates to taxes. I-bonds have tax-deferred growth feature.
Typical tax-efficient asset allocation strategy would do the following:
Prefer fixed-income investments (treasuries) into pre-tax accounts (reg IRA or 401K).
Prefer to fill-up ROTH (IRA or 401K) accounts with highest expected return asset (stocks).
Prefer to fill-up after-tax accounts with tax efficient investments (e.g., stocks or munis).
I-Bonds (can be bought with only after tax dollars), when kept to maturity, somewhat act like a pre-tax account, as taxes are deferred to maturity (tax deferred growth). So, I would rather hold I-bonds vs marketable securities for tax reasons.
TY