Direct Deposit Your Refunds!

March, 13 2014 by Carol Thompson, EA

The fastest way to get your money without paying additional fees is to e-file your return and have the money Direct Deposited to your bank account.  It’s safe, easy, and highly recommended.  If you get an “instant” refund, it is a loan against your refund for which you are charged a fee.  In refund “loans,” the fees for tax preparation and the loan are deducted out of your refund, so you aren’t as likely to see them.  What’s worse, if there is an issue with your refund, you will owe the difference back to the lender – with interest.

In IRS Tax Tip 2013-15, there are four reasons to use Direct Deposit:

1. Convenience: The deposit is wire-transferred directly to your bank account – usually within a few days.


2. Security:  There is no risk of your refund check being stolen or lost in the mail, and a check can take 4 to 6 weeks.


3. Ease:  Whether you prepare your own return or see a tax pro, all you need is the routing and bank account numbers, but be sure to follow the instructions carefully.


4. Options:  You can even split your refund between up to three financial accounts.  The money can go to your checking or savings accounts; or to your retirement, health, and education accounts.  Use Form 8888 if you want to split your refund.

Important note:  It is illegal for a tax preparer to request payment using Form 8888. Do not enter an account that does not belong to you, and when you are given a copy of your tax return, verify that your account is above your signature, or a properly filled out Form 8888 is attached.  (Visit www.IRS.gov for more details.)