Now
you can buy U.S. Series I Savings Bonds with your tax refund
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’s 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 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.
