Each new tax season gives a lot of people the largest single payment they may see all year -- around $3,000 on average. Today, more Americans choose to use tax refunds to pay down debt and build up savings. And many will look to financial advisors for ways to save and grow their refunds. Tell them how to buy savings bonds, a convenient, safe and affordable option, offered by the U.S. Department of the Treasury when they file their tax returns.

Taxpayers may buy paper Series I Savings Bonds in amounts ranging from $50 to $5,000 with their annual tax refund by completing IRS Form 8888— Allocation of Refund (Including Savings Bond Purchases). TreasuryDirect online account holders may use the same form to deposit all or part of their tax refunds directly into their TreasuryDirect accounts to buy digital savings bonds. In either case, taxpayers may buy bonds for themselves or to give as gifts to children, relatives or friends.

Why Series I Savings Bonds?
Series I Savings Bonds can help your clients plan for a new home, retirement, college savings or other life goals. While I Bonds earn interest for 30 years, owners may cash bonds at anytime after holding them for at least one year. (Be sure to let them know, however, that it’s better to hold bonds for at least five years to avoid early redemption penalties.) I Bonds are exempt from state and local income taxes and their interest earnings may be exempt from federal income taxes when used to pay for qualified higher education expenses. I Bonds currently offer an interest rate of 1.76 percent.

Help your clients follow these steps if they want to put this year’s tax refunds to work with savings bonds:
1. Fill out IRS Form 8888. Complete this form to designate a dollar amount to buy paper Series I Savings Bonds or to deposit into a TreasuryDirect account. 

2. Set up a TreasuryDirect account. Although clients can buy paper savings bonds with their tax refunds, digital savings bonds are even easier to manage with an online TreasuryDirect account. If a client wants to buy digital savings bonds but doesn’t have a TreasuryDirect account, they’ll want to set one up before they finish filing. Instructions for setting up a TreasuryDirect account are available through these tools: tip sheet and guided tour.

3. Give paper savings bonds as a gift with tax refund dollars. Your clients may use their tax refunds to buy paper savings bonds as a gift to others. To do so, add the recipient's name as a “co-owner” or “beneficiary” on Form 8888. The bonds will be mailed to your client.

4. Give digital savings bonds as a gift with tax refund dollars. Your clients may also use their tax refunds to give digital savings bonds as gifts to others. To do so, they’ll need to deposit all or part of their refunds into their TreasuryDirect accounts by using Form 8888. They can make gifts after their refunds are deposited in their TreasuryDirect accounts. Guidance on gifting savings bonds include a tip sheet, demo and video.

If your clients want to use their tax refunds to buy digital savings bond for their minor children, they’ll need to set up special accounts for their children within the parents’ TreasuryDirect accounts. When they’re ready to set up these minor-linked TreasuryDirect accounts, they’ll want to have their children’s birthdates, Social Security numbers and bank account routing numbers handy. In these special TreasuryDirect accounts for children under the age of 18, parents can buy and cash bonds, receive gift deliveries, and perform other transactions on behalf of their children. When the children reach age 18 and establish their own TreasuryDirect accounts, the funds can be transferred into the adult child’s new primary TreasuryDirect account.

Save With Savings Bonds Year-Round
Digital U.S. Savings Bonds are a good investment at tax time – or anytime. For example, your clients can enroll in payroll direct deposit through their employer to build a regular savings habit. Each pay day they can automatically contribute their desired amount into their TreasuryDirect account and begin building a nest egg for the future. More information about payroll direct deposit and other Treasury securities can be found on the Ready.Save.Grow. website at www.treasurydirect.gov/readysavegrow. Paper U.S. Savings Bonds are available only through the federal tax-refund process.

Jerry Kelly is national director of U.S. Treasury's Ready.Save.Grow. campaign.