Tax Refund Direct Deposit Options

Direct deposit options include deposit into your savings, checking, retirement account or split refunds into two or three accounts and new in 2010 to purchase Treasury / Savings Bonds.

 

Tax Refund Direct Deposit

Using direct deposit of your tax refund ias simple. You just enter your account number and your nine digit ACH/Routing number into your tax return.

Direct deposit is safer, because the money goes directly into your account so no lost checks. The direct deposit usually means you will get your refund a week sooner as well, in some cases in as little as ten days.

 

Splitting Tax Refunds

You may want to split your refund into two or three different accounts. As an example you may want some of your refund to go into savings, some into your checking and some into a retirement fund. Other examples of financial accounts eligible to receive deposits include health savings accounts and Coverdell education savings accounts.

Some prepaid Visa accounts will also let you make a direct deposit into them, check with your account holder to see if this is possible.

Splitting a refund requires tax Form 8888, Direct Deposit of Refund to More Than One Account, to split a tax refund into two or three financial accounts. The form provides instructions.

 

Buying Savings Bonds with Tax Refunds – Form 8888

New in 2010 is the ability to use your tax refund to buy up to $5,000 in low-risk, liquid Treasury Bonds, which earn interest and protect owners against inflation.

The purchased bonds will be issued in the taxpayer’s name. If the refund is a joint refund, the bonds will be issued in the names of both taxpayers. No beneficiary may be selected. The taxpayer need not have a Treasury Direct account to purchase Bonds using this option.

Using Form 8888, the taxpayer enters 043736881 as the routing number and checks the “savings” box. He must use the letters “BONDS” as the account number.
An I Bond request must be a multiple of $50. The taxpayer also needs to designate an account to which he wants the IRS to deposit the balance of his refund. For example, if his refund is $280, the taxpayer can request that $250 be used to purchase I Bonds and that the remaining $30 be deposited into a checking, savings or investment account.

In cases where a refund is an exact multiple of $50 but less than $5,000, the taxpayer may direct that all of the refund be applied to I Bond purchases by filling out the direct deposit information on his tax return and simply not using Form 8888.

The savings bonds will be mailed to the taxpayer.

Bonds will not be purchased in situations where the taxpayer makes an error figuring his refund, or if the bond request is not a multiple of $50 or the refund is offset for any reason. In these cases, the requested purchase will be cancelled and the entire refund mailed to the taxpayer in the form of a check.

Once the IRS has processed a tax return and placed an order for I Bonds, the taxpayer can inquire about the status of his bond purchase by calling the Treasury Retail Securities Site at 1-800-245-2804.

 

Individual Retirement Arrangements and Tax Refunds

Refunds may be deposited directly into previously established traditional IRAs, Roth IRAs and SEP-IRAs. (They may not be deposited into SIMPLE IRAs.)

The taxpayer should check with his financial institution to confirm that it accepts direct deposits as well as inform the trustee of the tax year to which the IRA should be contributed. For example, if a taxpayer intends for a direct deposit to be designated as a 2009 IRA contribution but fails to inform the trustee, the deposit might be designated as a 2010 contribution. The direct deposit contribution to an IRA must be made prior to April 15 in order to apply to the 2010 tax year.

IRS Holding $123.5 Million in Undeliverable Refunds to Taxpayers

Missing your tax refund?

The Internal Revenue Service is looking for taxpayers who are due to receive a combined $123.5 million in the form of 107,831 refund checks that were returned to the IRS by the U.S. Postal Service due to mailing address errors.

tax-refund-check

“We are eager to get this money into the hands of taxpayers, so don’t delay if you think you are missing a refund,” said IRS Commissioner Doug Shulman. “The sooner you update your address information, the quicker you can get your refund.”

All a taxpayer has to do is update his or her address once. The IRS will then send out all checks due. Undeliverable refund checks average $1,148 this year, compared to $990 last year. Some taxpayers are due more than one check.

 

IRS Holding $123.5 Million in Undeliverable Refunds to Taxpayers

Average undeliverable refunds rose by 16 percent this year, which is in line with the 16 percent rise in average refunds for all tax returns in the latest filing season. Several changes in tax law likely played a role in boosting refunds, including the First-Time Homebuyer’s Credit and the Recovery Rebate Credit, among others.

The vast majority of checks mailed out by the IRS each year reach their rightful owner. Only a very small percent are returned by the U.S. Postal Service as undeliverable.

If a refund check is returned to the IRS as undeliverable, taxpayers can generally update their addresses with the Where’s my refund? tool. The tool enables taxpayers to check the status of their refunds. A taxpayer must submit his or her social security number, filing status and amount of refund shown on their 2008 return. The tool will provide the status of their refund and in some cases provide instructions on how to resolve delivery problems.

Taxpayers checking on a refund over the phone will be given instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954.

The IRS encourages taxpayers to choose direct deposit when they file their returns because it puts an end to lost, stolen or undeliverable checks. Taxpayers can receive refunds directly into personal checking or savings accounts. Direct deposit is available for filers of both paper and electronic returns.

The IRS also encourages taxpayers to file their tax returns electronically because e-file eliminates the risk of lost paper returns. E-file also reduces errors on tax returns and speeds up refunds.

E-file coupled with direct deposit is your best option; it’s easy, fast and safe.

10 Things You Should Know About Tax Refunds

Are you expecting a refund from the IRS this year?

The average tax refund stands at just a hair under three thousand dollars. At this time last year, the average was a little over that amount, sitting at $3,030 (the average for last year would later fall to $2,803 as later filers were accounted for).

In previous years, the average tax refund has been in the same range, with the average peaking for the 2009 tax year before slipping:

  • Average 2012 Refund: $2,803
  • Average 2011 Refund: $2,913
  • Average 2010 Refund: $3,003
  • Average 2009 Refund: $3,036
  • Average 2008 Refund: $2,728
  • Average 2007 Refund: $2,699

 

10 Things You Should Know About Tax Refunds

Here are the top ten things you should know about your tax refund.

  • Refund Options You have two options for receiving your individual federal income tax refund: a paper check or a direct deposit.
  • Separate Accounts You may use Form 8888, Direct Deposit of Refund to More Than One Account, to request that your refund be allocated by direct deposit among up to three separate accounts, such as checking or savings or retirement accounts.
  • Paper Return Processing Time If you file a complete and accurate paper tax return, your refund will usually be issued within six weeks from the received date.
  • Returns Filed Electronically If you filed electronically, your refund will normally be issued within three weeks after the acknowledgment date.
  • Check the Status Online The fastest and easiest way to find out about your current year refund is to go to the IRS.gov Web site and click on the “Where’s My Refund?” link available from the home page. You will need your Social Security number, filing status and the exact whole dollar amount of your refund to check the status online.
  • Check the Status By Phone Call the IRS Refund Hotline at 800-829–1954. When you call, you will need to provide your Social Security number, your filing status, and the exact whole dollar amount of the refund shown on your return.
  • Delayed Refund There are several reasons for delayed refunds. For things that may delay the processing of your return, refer to Tax Topic 303 on IRS.gov, which includes a Checklist of Common Errors When Preparing Your Tax Return.
  • Larger than Expected Refund If you receive a refund to which you are not entitled, or one for an amount that is more than you expected, do not cash the check until you receive a notice explaining the difference. Follow the instructions on the notice.
  • Smaller than Expected Refund If you receive a refund for a smaller amount than you expected, you may cash the check, and, if it is determined that you should have received more, you will later receive a check for the difference. If you did not receive a notice and you have questions about the amount of your refund, wait two weeks after receiving the refund, then call 800–829–1040.
  • Missing Refund The IRS will assist you in obtaining a replacement check for a refund check that is verified as lost or stolen. If the IRS was unable to deliver your refund because you moved, you can change your address online. Once your address has been changed, the IRS can reissue the undelivered check. For more information, visit IRS.gov or call 800-829-1040.

 

e-Filing

eFile Your 2007 Income Tax Return Electronically

  • Nearly 80 million tax returns were e-filed in 2006! (22.6 million were filed from home computers).
  • Ask us about filing and paying electronically. Filing taxes online and paying electronically gets taxes done more accurately, quickly and efficiently.
  • Electronic tax filing and paying ensures that your tax information arrives and that your history is safe and secure.
  • Direct Deposit of your tax refund will ensure you recieve your refund safely. 115,478 taxpayers did not recieve their refund checks (worth about $110 million) because the checks were returned as undeliverable.

Since 2001, the number of e-filed returns has almost doubled and over the past decade the number of e-filers has increased four-fold.

  Year 

Returns

  Total e-file 

 Percent e-file

1997

 121.5 million

19.2 million

15.8%

1998

123.8 million

24.6 million

19.9%

1999

125.9 million

29.3 million

23.3%

2000

128.4 million

35.4 million

27.6%

2001

131.0 million

40.2 million

30.7%

2002

131.7 million

46.9 million

35.6%

2003

131.6 million

52.9 million

40.2%

2004

132.2 million

61.5 million

46.5%

2005

134.0 million

68.5 million

51.1%

2006

136.1 million

73.3 million

53.8%

More than 22.6 million returns have been e-filed by taxpayers doing their own returns, up from 20.3 million from the same period last year. More than 57.4 million returns were e-filed by tax professionals, up from nearly 52.9 million last year.

Begin Preparing Your Tax Return Now