Turn Your Tax Refund Into Instant Savings

Taxpayers due a refund from the IRS now have more ways to save the money they’re getting back from Uncle Sam.

By completing Form 8888 when filing your taxes, you can instruct the IRS to directly deposit your refund into more than one bank account, or buy up to $5,000 in U.S. Series I Savings Bonds.

The IRS has expanded Form 8888 to allow taxpayers to use all or part of their refund to buy the bonds. Savings Bonds can be purchased in $50 increments up to a maximum of $5,000. You can also choose to have your remaining tax refund delivered by check or by direct deposit. The paper Savings Bonds will be delivered by mail to the address listed on the tax return.

You can use your refund to buy Savings Bonds for yourself or others, including your children and grandchildren.

I Bonds are purchased at face value, meaning if you pay $50 using your refund, you get a $50 Savings Bond. While you own them, they earn interest and provide protection from inflation. Although Savings Bonds are not marketable, in the sense that they cannot be bought or sold in a secondary securities market, they can generally be redeemed for principal and accrued earnings at any time after 12 months.

Savings Bonds are designed as longer-term investments. If you redeem them within the first five years, the three most recent months' interest will be forfeited. After five years, no penalty will apply.

Visit the IRS website to learn more about purchasing Savings Bonds with your refund.