Purchasing savings bonds with your tax refund is a quick and straightforward process. Use Form 8888, Allocation of Refund (Including Bond Purchases) PDF if you’re filing a paper return. What you must do is explained in the instructions. This program allows you to buy up to $5,000 in I bonds in a single calendar year.
The Series I savings bond is theonly savings bond available in paper form, and it can be purchased only throughthis program.
(Electronic versions of Series Ibonds are also accessible via TreasuryDirect.) Only paper I bonds are addressed on this page.)
Whatdo I need to do?
Include IRS Form 8888 with your tax return when you file it. Part 2 is where you tell the IRS that you wish to utilize a portion (or all) of your return to buy paper I bonds. Purchase quantities must be in $50 increments, and you have the option of receiving any remaining cash via direct deposit or cheque. You do not need to create a TreasuryDirectaccount; simply follow the on-screen instructions. Your paper savings bonds will be mailed to you once the IRS has processed your tax return.
How much can I buy?
You can use your return to buy up to $5,000 in paper I bonds in a single calendar year. I bonds are purchased at face value, which means that if you pay $50 (with your refund), you will receive a $50 savings bond.
Whatdenominations are available?
Depending on the amount requested, Paper I bonds are issued in denominations of $50, $100, $200, $500, and $1,000.
If you order $250 or less in savings bonds, we will fill your order with $50 denominations.
If you purchase more than $250 in savings bonds, we will fill the first $250 with $50 denominations and the fewest number of extra bonds available. If you ask for $1,000 in paper I bonds, you’ll get six $50 bonds, one $200 bond, and one $500 bond, for example.
Whatregistrations are available?
Paper bonds can be registered as a single owner, co-owner, or beneficiary. You can even order bonds in other people’s names and present them to them as gifts.
Can Ibuy savings bonds for others using thistax refund method?
Yes. Paper bonds can be requested in the names of others, allowing them to be given as gifts. They’ll be mailed to the address you provided to the IRS.
How long will it take to receive my paper savings bonds?
After the IRS has processed your return, they will be issued and mailed to you. You should receive your savings bonds within three weeks after they are issued. You may receive your return before your bonds if you have a portion of your refund sent immediately into your bank account.
Whatwill the issue date of my bonds be?
The first day of the month in which the IRS sends payment for the bonds to the Treasury RetailSecurities Site in Minneapolis will be the issue date for paper bonds. For example, if Minneapolis receives your IRS order on February 18, your savings bonds will be issued on February 1.
Whatif there’s a mistake on my tax return?
The bond purchase will be canceled and the full refund amount (if any) will be delivered to you if the IRS finds mistakes on your return (refund amount is calculated improperly, IRS Form 8888 is completed incorrectly, desired amount is not a multiple of $50, etc.).
Exception: If an error results in a higher refund amount, the bond will be purchased as requested, and only the additional amounts will be repaid.
Whatdo I do if I don’t get my paper savings bonds?
The first step is to verify the status of your return by visiting www.irs.gov and heading to “Where’s My Refund” or calling 800-829-1954. You can check your status within 24 hours of the IRS receiving your e-filed return or four weeks after mailing a paper return, according to the IRS. If the IRS has processed your return and placed your savings bond order, call 844-284-2676 (toll free) to check on the status of your bonds.
What is the procedure for purchasing an I Bond?
When it comes to tax considerations, I bonds have the upper hand over CDs. State and local income taxes do not apply to I bond interest, and you can elect to postpone federal income taxes on your earnings until you cash the bonds in. (On the other hand, CD bank interest is taxed annually as it accrues, even if you reinvest it all.) Another tax benefit that parents and grandparents may be interested in is that if you cash in an I bond to pay for higher education, the interest may not be federally taxable at all. However, to qualify for this income exclusion, your modified adjusted gross income must be below a particular thresholdin 2021, the threshold will be $83,200 for singles and $124,800 for couples. This figure is updated for inflation every year.
Set up an account with TreasuryDirect and link it to your bank or money market account to purchase I bonds. You can also purchase I bonds by enrolling in the Treasury’s payroll savings program, which allows you to set up recurring purchases of electronic savings bonds with funds deducted directly from your salary.
Is buying paper I bonds the only option these days? Request that your tax refund be utilized to buy them. If you file your 2021 tax return by early April and are due a refund, consider investing it in I bonds to lock in that 7.12 percent interest rate for six months. (In addition to the $10,000 you can buy online through TreasuryDirect, you can buy up to $5,000 in I bonds with your refund.)
Are my bonds deductible for tax purposes?
You cannot deduct your investment in government-issued savings bonds, according to the Internal Revenue Service. At the federal level, interest is taxable, but not at the state or local level.
How do I acquire my TurboTax I Bonds?
TurboTax. Choose direct deposit over check when TurboTax asks if you’d like your refund via direct deposit or cheque. You tick a box at the bottom to indicate that you wish to split your tax refund and utilize a portion of it to purchase I Bonds. Then decide whether to buy I Bonds or direct deposit the remainder of your refund.
When I cash in my savings bonds, will I receive a 1099?
On January of the following year, 1099-INTs are posted in TreasuryDirect. Use the ManageDirect page’s URL.
If you cash at a bank, the paperwork is provided. The bank may give you the form right away or mail it to you later, maybe after the year in which you cash the bond has ended.
If you cash with Treasury Retail Securities Services, the form will be mailed to you in January of the following year.
Is it possible to purchase paper I Bonds?
Although the current 2.2 percent interest rate on Series I savings bonds is appealing, purchasing the bonds has grown more difficult. Paper Series I and EE savings bondsthose handy envelope stuffer giftscan no longer be purchased in banks or credit unions; instead, you must purchase electronic bonds through TreasuryDirect, the Treasury Department’s Web-based system. Our correspondent discovered the procedure of purchasing a savings bond for her little nephew to be cumbersome. Here’s some assistance:
Is it wise to invest in I bonds?
- I bonds are a smart cash investment since they are guaranteed and provide inflation-adjusted interest that is tax-deferred. After a year, they are also liquid.
- You can purchase up to $15,000 in I bonds per calendar year, in both electronic and paper form.
- I bonds earn interest and can be cashed in during retirement to ensure that you have secure, guaranteed investments.
- The term “interest” refers to a mix of a fixed rate and the rate of inflation. The interest rate for I bonds purchased between November 2021 and April 2022 was 7.12 percent.
Are there any income restrictions on bonds?
One major stumbling block for I Bonds is that you’ll have to wait at least one year to pay out a new I Bond. This isn’t like a checking account where you can withdraw money whenever you want.
If you acquire I Bonds now and need money in March or April, you won’t be able to use that money to pay bills or cover expenditures.
If you redeem an I Bond during the first five years of purchasing it, you’ll forfeit the last three months of interest. Experts say the present yield is appealing enough that you could lose a little income if you need to sell the bonds in two or three years.
As we get closer to tax season next year, it’s also worth remembering that you can buy paper I Bonds with your tax refund.
According to the TreasuryDirect website, you can use your refund to purchase up to $5,000 in paper I Bonds in a single calendar year. Paper I Bonds are available in $50, $100, $200, $500, and $1,000 denominations.
You would include IRS Form 8888 with your tax return to put tax refund money toward I Bonds.
The $5,000 annual limit for I Bond purchases made using tax refund money is in addition to the annual maximum for I Bond purchases made online at TreasuryDirect.gov, which is $10,000 for individuals and $20,000 for married couples.
Is it possible to buy bonds through Schwab?
Schwab BondSource gives you access to over 60,000 bonds from over 200 dealers, including new-issue municipal and corporate bonds1, all at the best price Schwab can offer.