Recieve your Tax Refund as a Savings Bond for 2009 Taxes

Starting Now- you can buy Series I U.S Savings Bonds with your Tax Refund. These Series I bonds are issued by the Department of Treasury, they're low-risk and grow in value for up to 30 years. Additionally, these bonds earn interest.

How to Buy Savings Bonds with your Tax Refund
The task is easy. Tell your Task Preparer that you want to buy savings bonds with your Tax Returns. It can be part of your returns, or all of it. If you prepare your own Return, file Form 8888, Direct Deposit of Refund into More Than One Account. The form instructions will guide you the rest of the way.

Is there a limit to the amount you can purchase?
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 to deposit the remaining amount of your refund.

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 both your name and your wife's name.

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. The remainder will go to any account your designate.

Type "Where's my Refund" into the IRS search engine to see if Step 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 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.

Watch out: 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.