Form 8888 and Series I Savings Bonds

For the 2017 Tax Filing Season, taxpayers continue to have the opportunity to purchase United States Series I Savings Bonds with their tax refunds. Taxpayers will continue to enjoy the opportunity to purchase bonds in two unique formats. First, is the ability for a taxpayer to purchase Savings Bonds for persons other than themselves (including children and grandchildren). Second, is the ability to purchase Savings Bonds with a portion of the refund and receive the remainder of the refund in the form of a check (negating the previous requirement to have a bank account to purchase Savings Bonds on Form 8888). By completing a Form 8888, Allocation of Refund (Including Savings Bond Purchases), it is simple and easy to accomplish. Please make taxpayers aware of their option to increase their savings by purchasing U.S. Savings Bonds.

U.S. Savings Bonds Information

U.S. Savings Bonds are savings instruments for individual savers issued by the Department of the Treasury. For purposes of this program, only Series I Savings Bonds will be offered. Taxpayers will continue to receive paper Savings Bonds when they utilize this program.

Series I bonds are sold at face value (a $50 bond costs $50), and grow in value for up to 30 years. In any single calendar year, taxpayers can purchase up to $5,000 of Series I Savings Bonds under this program.

Taxpayers can redeem Savings Bonds for principal and accrued earnings anytime after the first 12 months after purchase (or earlier if they live in an area affected by a natural disaster.) If a Savings Bond is redeemed within the first five years, the three most recent months’ interest will be forfeited. After five years, no forfeit of interest will apply.

Series I Bonds pay interest based on a combination of a fixed rate, (which remains the same throughout the life of the savings bond) and a semiannual inflation rate, which is updated each May and November. Savings Bonds accrue interest until redeemed or until they reach their maturity in 30 years.

The current annualized interest rate for Series I Savings Bonds in place during the 2017 Tax Filing Season is 2.76%. The 2.76% includes a fixed rate of 0.00% (which will be applicable for the entire life of the Series I Bonds purchased) and a 2.76% annualized rate of inflation. The 2.76% semi-annual inflation rate will apply from the time of purchase through April 30, 2017 when a new semi-annual rate of interest will be announced.