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Savings Bonds

Looking for more information on Series I savings bonds? You’ve come to the right place! We’re really excited that this year we can help our tax center clients allocate a portion of their refund to a savings bond. This page provides you with EVERYTHING you’ve ever wanted to know about the Series I U.S. Savings Bond. If there’s something that’s missing here, or you have questions please contact Karen.Serna@foundcom.org. She’ll be happy to answer your question.

Use the links below to jump to what you’re interested in:

Savings Bond Incentive Program
Claim your $25 HEB Gift Card

What form do I use to help my clients purchase a Series I U.S. Savings Bond?
I want the basics in 30 seconds
How is a savings bond issued?
How can I redeem a savings bond?
How are taxes calculated on earned interest from a savings bond?
What is the interest rate and how does it change?
How can you check the status of a savings bond purchase?
Why would a bond fail be issued?
How do savings bonds compare to savings accounts or CDs (Certificate of Deposit)?

What form do I use to help my client purchase a Series I U.S. Savings Bond?

Use IRS form 8888 which allows tax payers to split their refunds. Pull it up on TaxWise! Check it out here.

Savings Bond Incentive Program

Any client who has their 2011 taxes prepared at one of the 9 Community Tax Centers and allocates a portion of his/her refund to purchasing a savings bond is eligible to receive a $25 HEB card (while supplies last!) Only one gift card per tax return will be distributed. The minimum savings bond purchase is $50.

Claim your $25 HEB Gift Card!

Did you have your 2011 taxes prepared at one of our Community Tax Centers and you purchased a savings bond with part of your refund? If so, you are eligible to receive a $25 HEB gift card (while supplies last!) IF you didn't receive a $25 HEB gift card the day you had your taxes completed, please complete this form and email it to karen.serna@foundcom.org or fax it to (512) 916.4420.

The basics of Series I US Savings Bonds, in 30 seconds:

Conversation starters
Bonds start at $50 and go up to $5,000. They are purchased at face value (a $50 savings bond costs you $50)
After the bond is ordered on form 8888, the taxpayer will receive the bond in the mail in 3-5 weeks. The bond will be mailed to the address on the tax form.
Bonds can be cashed in after one year, but the longer they’re kept, the more interest will be earned. (If they are cashed in before five years, you’ll lose the last three months of interest. Bonds earn interest for 30 years).
The interest rate adjusts for inflation every six months (in April and October). Today, the interest rate is 3.06%.
Bonds can be cashed in at most banks or credit unions. There is no fee, and no bank account is required.

How is a savings bond issued?

Bonds will be mailed as paper bond certificates to the address on the tax return and may take up to five weeks to reach the tax filer
Tax filers may receive their refunds before the bond arrives by mail

How can I redeem a savings bond?

Can be redeemed at most banks and credit unions with a valid ID
Cannot be redeemed during the first 12 months after purchase unless the purchaser lives in an area affected by a natural disaster
If redeemed within the first 5 years, then the 3 most recent month’s interest is forfeited

How are taxes calculated on earned interest from a savings bond?

Earned interest is subject to federal income tax but is exempt from state and local income tax
Taxes on earned interest can be deferred until redemption or final maturity, whichever comes first.
Earned interest may qualify for exemption from taxes when redeemed to pay education expenses. Qualified taxpayers may be able to exclude all or part of the interest earned from eligible Savings Bonds issued after 1989 when paying qualified higher education expenses. The bond must be issued in the name of a taxpayer age 24 or older at the time of issuance.
Under certain circumstances, reissuing of bonds will require the interest earned on the bond to be reported as income in the year the reissue occurs

What is the interest rate and how does it change?

Currently offer 3.06% interest, have no fees and are protected from inflation
The interest rate has two components: a fixed rate that stays the same for the life of the bond and a variable semiannual inflation rate
The current rate of 3.06% includes a fixed rate of 0% and a variable semiannual inflate rate of 3.06%
The rate changes twice a year on May 1^st and November 1^st
Interest accrues from the 1^st day of the month of purchase and compounds semiannually based on the issue date
Bonds continue to earn interest for 30 years or until they are redeemed, whichever comes first

How can you check the status of savings bond purchase?

To check the status of a bond purchase request, the tax filer first must check the status of their refund by visiting the IRS website: www.irs.gov and selecting “Where’s My Refund” taxpayers may also call 1-800-829-1954.
If the IRS has processed the refund and placed the request for the bond, then the tax filer should contact the Treasury Retail Securities at 1-800-245-2804.