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With tax filing season well underway, you should definitely consider a direct deposit of your tax refund. Not only is it easy, safe, and fast, it is the best way to get a refund according to 80% of taxpayers. Many of you opt for receiving the return this way every year now.
The five best reasons to choose direct deposit:
- It’s Secure. Refunds go directly into the bank account of your choosing. That means there’s no risk of having a paper check stolen or lost. This is the same electronic transfer system that deposits nearly 98% of all monthly Social Security and Veterans Affairs benefits into millions of accounts.
- It’s Easy. Choosing direct deposit is easy. With e-file, just follow the instructions in the tax software. For paper returns, the tax form instructions serve as a guide. Make sure to enter the correct bank account and routing number.
- It’s Fast. The quickest way for taxpayers to get their refund is to electronically file their federal tax return and use direct deposit. They can use IRS Free File to prepare and e-file federal returns for free. Taxpayers who file a paper return can also use direct deposit.
- It Has Options. Taxpayers can split a refund into several financial accounts. These include checking, savings, health, education and certain retirement accounts. Use IRS Form 8888, Allocation of Refund (including Savings Bond Purchases), to deposit a refund in up to three accounts. Do not use this form to designate part of a refund to pay tax preparers.
Click here to learn about how to set up direct deposit.
Make sure that you deposit refunds into accounts in your own name, or your spouse’s name or both. Avoid making a deposit into accounts owned by others. Some banks require both spouses’ names on the account to deposit a refund from a joint return. Taxpayers should check with their bank for direct deposit rules.
However, do know that there is a limit of three electronic direct deposit refunds made into a single financial account or pre-paid debit card. The IRS will send a notice and a refund check in the mail to any taxpayers exceeding the limit.