By Meagan Dorsch
Saving money for future emergencies can be difficult. Research shows that 25 percent of Americans have no savings. One way people can save is to commit part of their federal tax refund to a savings account or U.S. savings bond. Many taxpayers, however, are unaware of these options.
In this edition of The Buzz at State Legislatures Qiana Flores of the NCSL Working Families Partnership talks about split refunds and the purchase of US Savings bonds at tax time as low-cost policies to encourage savings. The option to deposit federal tax refunds directly into as many as three different accounts was introduced by the Internal Revenue Service (IRS) in tax season 2007. In 2010, the IRS allowed taxpayers to buy inflation-protected U.S. savings bonds with their federal tax refunds.
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When these policies were piloted by the Doorways to Dreams Fund results showed that people, including those who were not in the habit of setting money aside, chose to save. Qiana talks about the three states that have enacted legislation allowing state tax refunds to be directly deposited into several accounts, as well and provides resources for how legislators can get the word out about the federal split refund and U.S. savings bond option.
This podcast is made possible by the support from the Charles Stuart Mott Foundation.