Tax Time Savings
On September 5, 2009, President Obama announced that tax filers receiving refunds would now be able to purchase savings bonds by simply checking a box on the tax form. The “Tax Time Savings” policy was a victory for low-income households, whose tax refund is the largest sum of disposable income they’ll have access to all year. In the three years since its inception, the Tax Time Savings policy has generated more than $40 million in savings for 100,000 Americans. In 2008, D2D formed the Savings Bond Working Group (SBWG), a coalition of national and community non-profit organizations, commercial tax preparers, tax software firms, and public officials, to encourage saving by all Americans, especially low and moderate income families, through the option to purchase U.S. Series I Savings Bonds with a portion of their tax refunds. The SBWG works nationally to raise awareness of this saving opportunity through congressional outreach, media coverage, and community involvement.
In 2012*, for the 2011 tax year, nearly 40,000 taxpayers bought savings bonds through their tax returns, saving, collectively, $21.5 million on behalf of 55,000 people. Nearly two-thirds of the taxpayers were from families whose annual income was less than $50,000.
On January 1st 2012, the U.S. Treasury announced the end of the paper bond program. As a result, the policy is not guaranteed beyond 2015. D2D and the SBWG are concerned about the lack of access to savings bonds for low-income families, both at tax time and year round. TreasuryDirect, the only way to purchase savings bonds (in electronic form) outside tax time is difficult to use, especially by those without broadband access. In the New York Times oped, "Save the Savings Bond," D2D co-founder Peter Tufano calls attention to issues of accessibility with TreasuryDirect:
- It presupposes ready Internet access, which about 35 percent of all Americans and 65 percent of low-income Americans do not have.
- The system requires a user to have a bank account, effectively excluding the 17 million American adults who are “unbanked.”
- This may explain why less than 1 percent of the 55 million people who own savings bonds have TreasuryDirect accounts.
*Source: IRS, January, 2013 and BPD, December 2013
To continue to promote saving at tax time, D2D has launched the SaveYourRefund promotion. Beginning January 24th, 2014 and running through April 15th, 2014, tax filers who save at least $50 of their federal refund using IRS Form 8888 can enter the promotion. SaveYourRefund will award 100 weekly prizes of $100 and one $25,000 Grand Prize. By offering large prize incentives, SaveYourRefund will transform the often- stressful, anxious, moment of tax filing and the serious, earnest act of savings into a time of celebration.
Each tax season, $300 billion flows in federal refunds, with over $100 billion going to those living on household incomes of $50,000 or less. Federal tax refunds offer many people a lump sum even larger than the typical paycheck. With a large influx of cash comes a unique opportunity to set aside savings. Today, all tax filers have an easy way to save built into the tax form; IRS Form 8888 allows filers to split their refund into more than one account or save directly in U.S. Savings Bonds, making saving quick and easy. Leveraging the power of this split refund infrastructure and with the help of partners in the public, private, and social sectors, SaveYourRefund will make saving at tax time rewarding, easy, exciting, and fun.
D2D is working on developing the concept of an R-bond, a retirement savings vehicle for the small and/or first-time saver. In particular, additional work is being done to test consumers’ appetite for the concept, effective marketing messages and frames and promising distribution channel options
Tax Time Action Items
- Saving Bond Working Group
- Learn more and enter SaveYourRefund!
- Sign the Petition
- Spread the Word!
- Follow the campaign on Twitter or Facebook
Tax Time Savings publications
- Policy Brief: Tax-Time Savings Bonds
- Keep Bonds Easy
- 2012 Savings Bond Report
- 2011 Savings Bond Report
- Disrupting the Poverty Cycle: Emerging Practices to Achieve Economic Mobility
- Everyone Can Save: Building Savings One Bond at a Time
- Yes We Can: Inclusive Saving at Tax Time
- Returning to American Thrift
- Tax Time Savings: Testing US Savings Bonds at H&R Block Tax Sites
- America's Best Kept Saving Secret: Testing U.S. Savings Bonds To Help Low-Income Tax Filers Begin Saving
- Further Research on U.S. Savings Bonds; Request for Proposal from VITA Sites
- Promise and Potential of U.S. Savings Bonds
- Building Savings at Tax Time: A Guide to Split-Refunds
- Reinventing Savings Bonds
- Leveraging Tax Refunds to Encourage Savings
- An Evaluation of Tax-Refund Splitting as an Asset-Buliding Tool for Low-to-Middle Income Individuals
Tax Time Savings Updates
- D2D Announces Grand Prize SaveYourRefund Winner!
- US Savings Bonds Gain Attention During Treasury Secretary Confirmation Process
- SaveYourRefund Announces First $250 Winners!
Tax Time Savings main contact: Joanna Smith-Ramani