The Daily Finance Guide: Get Tax Refunds by Direct Deposit

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You may wait at your mailbox for a tax refund check to snail-mail it's way to your address, but delays may lead financial problem if there is a funds crunch. Its good that the Internal Revenue Service let you have some or all of your federal tax refund directly deposited to your bank account electronically. All you need to do is ask them.

As many as Eight out of Ten taxpayers choose this option, which is easy.

Following is what you what you should know.

Important: If you received a refund through direct deposit for either the 2018 or 2019 tax years, your 2020 stimulus check would automatically be issued in the same manner, of course provided you’re eligible. By using the IRS online tool for the status of your payment or by giving the concerned agency with your bank account information.

How Do You Request For A Direct Deposit

As per the IRS norms all returns filed during the coronavirus pandemic should be filed electronically. Paper returns will not be processed until the concerned processing centers open. However you can choose to direct deposit whether you file electronically or send a paper return.

If you need the amount sent to just one account, you may request a direct deposit on your 1040 tax return. In your return, you need to specify categorically your bank's routing transit number, your bank account number, and the type of account—checking or savings. The account must be in your name, your spouse's name if you're married, or in joint—both—names, if you hold the account with your spouse. Enter your banking information on lines 21a, 21b, 21c, and 21d of Form 1040.

You are permitted to use Form 8888 to split your refund among up to three different accounts. Form 8888 also allows you to use the refund to purchase U.S. Savings Bonds, or you may opt to have the money sent to your IRA.

Note: The IRS processes normally most refunds in a maximum 21 days. To check on the status of a refund, you should call the IRS at 800-829-1954 . You are also allowed to use the tool Where's My Refund?

Check On All Your Bank Account Information

The IRS is not liable for errors made by you while entering your bank account information on your return or Form 8888. The IRS has no liability if your refund goes to someone else because of your wrong numbers Note : The IRS will not be sending any kind of a second payment to your correct account.

Hence ensure the information you've entered is accurate before submitting to the IRS.

Incidentally Paper refunds are covered by the Check Forgery Insurance Fund (CFIF). The CFIF is a fund that settles non-receipt claims. Refunds issued via direct deposit are not covered by the government's CFIF.

If You Have Noticed Some Mistakes On Your Part

If the IRS catches some mistakes, like an omitted number, in such circumstances , your return will not pass the validation check, and you'll receive a check by mail . Its the same if your bank refuses to accept the deposit for some reason.

If you have noticed some mistakes before the IRS has processed your refund deposit, you can call the IRS at 1-800-829-1040 from 7 a.m. to 7 p.m. Monday through Friday, to stop the direct deposit.

Note: With social distancing norms triggered by the COVID virus the IRS phone lines are not staffed by customer service representatives. Its advisable to check the IRS's coronavirus webpage for updates.

If Your Refund Is Sent To The Wrong Bank Account

If your routing number indicated on your return is incorrect , get in touch with the bank at which your refund was deposited. (You may identify the bank by looking up the routing number you inadvertently entered on the IRS website.)

Contact the ACH manager at that bank requesting for the refund to be sent back to the IRS, then you call the IRS to alert them that the deposit will be coming back.

Taxpayers in this position should also consult with an attorney to review the legal options. Follow up by filing Form 3911, the Taxpayer Statement Regarding Refund, if the bank doesn't respond after two weeks.

If Your Tax Preparer Changes Your Bank Info

The National Taxpayer Advocate has indicated that certain tax preparers are changing the direct deposit bank information to divert funds into their accounts. This action is considered fraud. Tax refunds should be directly deposited only into a taxpayer's bank account.

Its advisable to take the help of an attorney to review available options for legal action to recover the refund if this happens to you.

The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk, including the possible loss of principal.

Get Tax Refunds by Direct Deposit