How to buy I Bonds with tax refunds and more as inflation hits 8.5%

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A return to go-go inflation is lousy on the wallet but maybe good for your tax refund.

The U.S. inflation rate hit 8.5% in March over the past 12 months — the largest 12-month increase since December 1981 when “Falcon Crest” debuted on Friday nights on CBS right after “Dallas.” 

Gas prices alone rose 48% in March, contributing to the unsteady feeling that consumers have about their wealth and the health of the U.S. economy.

Oddly enough, the IRS has a form relating to an inflation play for savings that some late filers still have time to consider.

Series I savings bonds are now only available in paper form if you use your income tax refund to buy the bonds and fill out IRS Form 8888 when you file your tax return. In any single calendar year, you can buy up to a total of $5,000 of paper I Bonds using your federal income tax refund. Series I savings bonds are also available in electronic format.

We’re edging closer to the April 18 deadline for filing federal income tax returns, Michigan returns and city of Detroit and other communities. 

While many people never heard of this tax tip, taxpayers can file what’s called Form 8888 to use at least part of their federal income tax refund to directly buy inflation-indexed savings bonds when they’re filing their federal tax returns. 

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