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Starting in January 2010, you can buy
Series I U.S. Savings Bonds with a portion
or all of your tax refund. Issued by the
Department of the Treasury, Series I bonds
are low-risk bonds that grow in value for
up to 30 years. While you own them they
earn interest and protect you from
inflation.
Buying savings bonds with your
tax refund is simple and easy
Just tell your tax preparer you
want to buy savings bonds with part or all
of your refund! If you prepare your own
return, file Form 8888, Direct Deposit of
Refund to More Than One Account. The
instructions explain what you need to do.
In any single calendar year, you can
purchase up to $5,000 of I bonds under
this program. If you purchase bonds with
your tax refund, the amount you request
must be divisible by 50. If you don’t
buy I bonds with 100 percent of your
refund, you will need to have another
account in which to deposit the remaining
amount of your refund. For example, if
your refund is $280; you can direct $250
to I bonds and the $30 balance to your
savings account.
Paper bonds will be issued in
your name
When you purchase savings bonds
with your tax refund, you will receive
paper bonds, issued in your name. If you
are married and filed a joint return, the
bonds will be issued in your and your
spouse’s name. You cannot designate a
beneficiary under this option.
Your request will be processed
in two parts
Part 1: Generally, you will
receive the bonds after you receive the
remainder of your tax refund from the IRS.
The IRS will process the portion of your
refund that you are not using to buy
savings bonds. This amount will be
deposited into the account you designate.
Go to Where’s My Refund? or call
1-800-829-1954 to see if Part 1 is
complete.
Part 2: The IRS will
forward your request for Savings Bonds to
the Treasury Retail Securities Site. It
will take them up to three weeks to issue
and send your bonds to you at the address
on your tax return. You can call the
Treasury Retail Securities Site at
1-800-245-2804 to check on the status of
your bond issuance.
More about savings bonds
Series I bonds pay interest based
on a combination of a fixed rate
(currently .30%), which remains the same
throughout the life of the Savings Bond,
plus a semiannual inflation rate -
currently 3.06%, which is updated each May
and November.
The interest earned by purchasing and
holding savings bonds is subject to
federal tax at the time the bonds are
redeemed. However, interest earned on
savings bonds is not taxable at the state
or local level.
Related Resources:
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Form
8888 Direct Deposit of Refund to
More Than One Account
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Split
Refunds Tell IRS to Direct
Deposit Your Refund to One, Two or
Three Accounts
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