The IRS is urging taxpayers to choose direct deposit this tax season. Optima Tax Relief explains the benefits of choosing direct deposit.
Direct deposit is simply the fastest way for taxpayers to be paid their refund, especially when e-filing. While those who are filing a paper return may also select direct deposit, it will take longer to process. Direct deposit is also the most secure way to obtain a refund as it eliminates the risk of having a paper check lost, stolen or returned to the IRS as undeliverable mail.
Not only is choosing direct deposit as a refund method easy, but it allows options for how the refund can be split. Taxpayers can use IRS Form 8888, Allocation of Refund, Including Savings Bond Purchases, to deposit their refund in up to three different financial accounts. These accounts include checking, savings, health savings accounts, education accounts, and some retirement accounts. Those who include more than three different accounts on their return will receive an IRS notice and a paper check refund.
Taxpayers should be sure to deposit their tax refunds into U.S. bank accounts in which they are an account holder; this includes joint accounts with their spouse. Correspondingly, they should avoid depositing their refunds into accounts that do not belong to them.
Individuals who do not have a bank account have several options for direct deposit as well. They can open a bank account online as most financial institutions do not require an in-branch visit to open an account. In addition, many mobile apps and prepaid debit cards can be used for direct deposit if they have account and routing numbers associated with them.
In any case, taxpayers should have these account and routing numbers for direct deposit before filing since this information will need to be included on the tax return.