What is IRS Direct Deposit?
March 7, 2017 : Allie Freeland – Contributing Editor
Editor’s Note: With potential refund delays expected this year, you may question the most efficient ways to get your tax refund. Read on to learn about IRS direct deposit…
Did you know that the IRS can have your tax refund electronically deposited into your bank account? Yes, and it’s free. You can use direct deposit to deposit your refund into up to three different financial accounts – or even a prepaid debit card.
Why Use Direct Deposit?
Did you know 8 in 10 taxpayers get their refunds by using direct deposit? Many people love it because offers multiple benefits:
- Simplicity: You can avoid having to visit the bank to deposit your refund check from the IRS.
- Security: Direct deposit circumvents the possibility of your check being lost or stolen or returned to IRS as undeliverable. Plus, it is the same electronic transfer system used to deposit nearly 98% of Social Security and Veterans Affairs benefits!
- Save Money: It costs more than $1 for every paper refund check issued, but only a dime for each direct deposit made. While this doesn’t directly come out of your refund, you are helping the IRS save money!
- Speed: Combining direct deposit with IRS e-File is the fastest way to receive your refund. IRS issues more than 9 in 10 refunds in less than 21 days.
[Bonus: You can track your refund using our Where’s My Refund? tool.]
How Do You Do Set It Up?
This method is easy. First, select “direct deposit” as your refund method through your online tax software. (Of course, we are partial to H&R Block tax software and H&R Block Online.] If you are filing with a Tax Pro within a tax office, tell them you want direct deposit.
Make sure to fill out the account number and routing number associated with your banking account. It can be retrieved simply by looking at one of your checks:
Click on image to enlarge.
[Bonus: You can even use direct deposit if you are one of the few people still filing by paper. Be sure to double check your entry to avoid errors.]
What Are Some Things I Should Be Careful Of?
Your refund should only be deposited into accounts in your own name, your spouse’s name, or both if it’s a joint account. No more than three electronic refunds can be deposited into a single account or pre-paid debit card. Taxpayers who exceed the limit will receive an IRS notice and a paper refund.
Whether you file electronically or on paper, direct deposit gives you access to your refund faster than a paper check.
A federal tax refund is the largest payment many people receive within the year. We hope you consider using direct deposit for the above reasons – and hope you use your refund wisely!