You can buy I Bonds with your tax refund by directing the IRS to send part or all of it to TreasuryDirect instead of your bank account

When you file your tax return, you can split your refund between a bank deposit and I Bond purchases through TreasuryDirect, the U.S. Treasury's online platform. You do this on Form 8888, which lets you divide your refund into up to three destinations. The IRS will send your chosen amount directly to TreasuryDirect, where it becomes a bond purchase in your name. This happens automatically—you don't buy the bonds yourself after receiving the money.

The minimum you can direct to I Bonds is $25, and you can put your entire refund there if you want. The purchase happens in the tax year you file, so if you file in 2024, the bonds are dated 2024 even if the money arrives in 2025. This matters because I Bond interest rates change every six months, and your rate is locked in based on the issue date.

Key Takeaways

  • You direct your refund to I Bonds using Form 8888 when you file your tax return, not after you receive the money.
  • The minimum purchase is $25, and you can split your refund between a bank account and I Bonds on the same form.
  • You must have a TreasuryDirect account set up before you file your return, or the IRS cannot complete the purchase.
  • The bonds are issued in the tax year you file, so the interest rate is locked in based on that year's rate, not when the money arrives.
  • You cannot cash in I Bonds for one year, and if you cash them before five years, you lose the last three months of interest.

Setting up your TreasuryDirect account before filing

You must create and verify a TreasuryDirect account before you file your tax return. The IRS cannot send money to an account that does not exist, and you cannot create one after filing and expect the refund to go there. Go to treasurydirect.gov, click "Open an Account," and provide your Social Security number, email, and a password. You will need to verify your identity—TreasuryDirect uses Secure Access, which checks your information against records from the IRS, Social Security Administration, and credit bureaus.

Verification usually takes a few minutes, but can take up to 24 hours. Once your account is active, write down your account number. You will need it when you fill out Form 8888. If you are married and filing jointly, both spouses can have separate TreasuryDirect accounts, and you can split the refund between them.

Filling out Form 8888 to direct your refund

Form 8888, "Allocation of Refund (Including Savings Bond Purchases)," is where you tell the IRS where to send your money. You can get it from the IRS website or your tax software will include it if you choose to split your refund. On the form, you list up to three destinations: a checking account, a savings account, and I Bonds through TreasuryDirect.

For the I Bond line, you enter your TreasuryDirect account number and the dollar amount you want to purchase. The form asks for the account number in a specific format—your software or the IRS instructions will show you where it goes. The total of all three destinations must equal your refund amount. If you want your entire refund as I Bonds, you leave the bank account lines blank and put the full amount on the TreasuryDirect line.

If you are using tax software, the program walks you through Form 8888 as part of the filing process. If you are filing by paper, you must attach the completed form to your return. The IRS will not process a refund split without it.

How long it takes from filing to bond purchase

The timeline depends on how you file. If you file electronically and choose direct deposit for any part of your refund, the IRS typically processes it within 21 days. The money going to TreasuryDirect follows the same timeline—it arrives in your TreasuryDirect account as a pending purchase, and the bonds are issued on the date the IRS sends the funds.

If you file by paper, processing takes longer, usually four to six weeks. During this time, your TreasuryDirect account will show the purchase as "pending." Once the IRS sends the money, the bonds are issued immediately and appear in your account as active holdings. You can see the issue date, interest rate, and maturity date in your TreasuryDirect dashboard.

The bond's issue date is what matters for the interest rate, not the date you filed or the date the money arrived. If you file in April 2024 but the IRS processes it in May 2024, your bonds are still dated 2024 and earn the 2024 rate that was in effect when they were issued.

I Bond rules that affect your refund purchase

I Bonds have holding periods and penalties you should understand before directing your refund there. You cannot cash in an I Bond for one year after purchase. If you need the money within a year, do not put it in I Bonds. After one year, you can cash them in, but if you do so before five years have passed, you lose the last three months of interest as a penalty.

There is also an annual purchase limit: you can buy up to $10,000 in I Bonds per person per calendar year through TreasuryDirect. If you are married and filing jointly, you and your spouse can each buy $10,000, for a total of $20,000. If your refund is larger than $10,000, you can only direct $10,000 to I Bonds; the rest must go to a bank account or another destination.

I Bonds earn interest that compounds every six months. The rate changes on May 1 and November 1 each year based on inflation. Your rate is locked in for the first six months, then adjusts. The current rate is always posted on treasurydirect.gov, but you cannot predict future rates.

What happens if something goes wrong with your purchase

If the IRS cannot complete the purchase—usually because your TreasuryDirect account number was wrong or your account was not verified—the IRS will send the full refund to your bank account instead. You will not receive a separate notice; the money will simply appear as a deposit. Check your TreasuryDirect account a few weeks after filing to confirm the bonds were issued. If they are not there and you do not see a pending purchase, contact the IRS to find out what happened.

If you filed with an incorrect account number, you cannot fix it after filing. The IRS will not redirect the money once it has been processed. Your only option is to receive the refund in your bank account and then buy I Bonds yourself through TreasuryDirect using that money. This means you will be buying them in a different tax year, so the issue date and interest rate will be different.

If you change your mind after filing but before the IRS processes your return, you can file an amended return (Form 1040-X) with a corrected Form 8888. This only works if the IRS has not yet sent the money. Once the refund has been processed, you cannot change where it goes.

Buying I Bonds yourself after receiving your refund

If you did not direct your refund to I Bonds when you filed, you can still buy them with the money once you receive it. Log into your TreasuryDirect account, go to "BuyDirect," and purchase I Bonds up to your $10,000 annual limit. The purchase takes effect immediately, and the bonds are issued on the date you buy them. This route gives you more control over timing—you can wait for a rate change if you want—but the bonds will be issued in a different tax year than your refund.

You can also buy I Bonds through your bank or broker, though this is less common and may involve fees. TreasuryDirect is the direct source and has no fees.

Frequently Asked Questions

Can I buy I Bonds with my refund if I do not have a TreasuryDirect account yet?

No. You must create and verify your TreasuryDirect account before you file your tax return. The IRS cannot send money to an account that does not exist. If you forget to set up an account, you can still buy I Bonds after you receive your refund in your bank account, but they will be issued in a different tax year.

What is the minimum amount I can direct to I Bonds?

The minimum is $25. You can split your refund so that $25 or more goes to I Bonds and the rest goes to your bank account. If your refund is less than $25, you cannot use this method.

What happens if my refund is larger than $10,000?

You can only direct $10,000 to I Bonds in a single calendar year. The remaining amount must go to a bank account or another destination listed on Form 8888. If you are married and filing jointly, you and your spouse can each direct up to $10,000, for a combined total of $20,000.

Can I access my money if I need it before the bonds mature?

You cannot cash in I Bonds for one year. After one year, you can cash them, but you will lose the last three months of interest if you do so before five years have passed. If you think you might need the money within a year, do not put your refund in I Bonds.

What interest rate will my I Bonds earn?

The rate depends on when the bonds are issued. The IRS issues them on the date it sends the money to TreasuryDirect, which is usually within 21 days of filing electronically. The current rate is posted on treasurydirect.gov. Rates change every six months on May 1 and November 1, so your rate will adjust after the first six months.