Tax Refund Options—The Quickest Ways to Get Your Money

The IRS offers several options, some speedier than others

If you're expecting a tax refund from the Internal Revenue Service (IRS), several options are available to you for getting your money more quickly, but there's one universal rule. You'll speed up the time it takes for the IRS to review your return and you'll get your refund faster if you file your tax return electronically.

The IRS indicates that it issues more than nine out of 10 e-filed refunds in less than 21 days.

Get Your Tax Refund by Direct Deposit

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You won't be alone if you opt for direct deposit: eight in 10 taxpayers use e-file and direct deposit to receive their refunds faster. You can get your money in as few as 10 days depending on when you file. The IRS can deposit the refund in a checking, savings, or retirement account. A space on your tax return is available for you to request direct deposit. 

Like a paper check refund, you can track your direct deposit refund online at Where's My Refund? 

Direct Depositing Into Multiple Accounts

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You can have your deposit split into different accounts as well, up to three in all. You can even direct all or part of your refund to your IRA; you're not limited to savings or checking accounts. 

Most tax preparation software walks you through requesting this type of payment if you use a program or website to do your taxes. Otherwise, you can complete and submit IRS Form 8888 with your tax return, telling the IRS that you want to split your refund among certain accounts. 

The accounts have to be in your name, your spouse's name, or in your joint names, but they don't all have to be held at the same bank or financial institution. Using this option won't delay your refund. But, of course, you'll want to be very sure that your bank accepts direct deposits to the type of account you're selecting. 

You can even use Form 8888 to request that you receive part of your refund by direct deposit and the balance by paper check.

You don't have to file Form 8888 if you want your refund deposited into just one account. Instead, enter that request directly on your tax return. 

Tax Refund Anticipation Loan

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Some businesses offer tax refund anticipation loans, often called "rapid refund" or "instant refund." You can get the money in just one to two days, and then, when your refund actually does arrive, it goes straight to the provider. The downside is that this speed will often cost you: Some businesses charge exorbitant fees to process these loans. 

American Express offers a similar service called Serve Card. You can get your refund up to two days sooner than you would with direct deposit if you have it directed to this card. 

And some tax preparers, including Jackson Hewitt, offer refund advances to qualified individuals who use their companies to do their taxes. H&R Block has an Emerald Prepaid Mastercard, but again, the company imposes various fees. 

Consider Buying Savings Bonds

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The IRS has offered a savings bond purchase option since 2010. You can specify that you'd like to use all or a portion of your refund to purchase Series I savings bonds when you file Form 8888 with your tax return. Just complete Part II of the form.

You're limited to a total bonds purchase of $5,000, and you must purchase one or more $50 bonds—no other face values are available through this program. The nice thing about I bonds is that they earn two types of interest: a fixed, standard rate, plus a rate that's adjusted for inflation every six months. 

Refunds by Paper Check

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The IRS will mail you a refund check, typically within about six weeks of receiving your return. Mailing the check takes about three weeks if you e-file. You can visit the IRS website to track the status of your refund check at Where's My Refund?

A paper check is the slowest way to get your refund. There's also a slight chance that the check could get lost in the mail, but the IRS has a process for straightening out such a problem.

What If Something Goes Wrong?

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It's easy enough to make a mistake at tax time. You wouldn't be the first taxpayer to transpose the numbers of your address or bank account. 

You can sometimes correct or change your address on the IRS website if you're expecting your refund from the U.S. Postal Service and you don't receive it after the predicted period of time. You can also call the IRS at 1-800-829-1040, or complete Form 8822 and mail it in to set the matter straight. The address is on the form.

As for Form 8888, the IRS will simply send you a paper check instead if you make a mistake here. This includes errors in bank account numbers or routing numbers.

But if the wrong account number you gave the IRS actually belongs to someone else and the bank accepts the deposit into that other account, you'll have to work out the problem with the financial institution. The IRS won't get involved. As far as it's concerned, the refund has been paid. 

The Effect of Refundable Tax Credits

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You might qualify for the earned income tax credit (EITC) if you earn a low or moderate income. With this refundable tax credit, the IRS sends you a refund check even if you haven't overpaid through withholding or estimated tax payments during the year.

The amount of the credit depends on your income and the number of children you have. Claiming this tax credit or the Child Tax Credit will result in your refund being slightly delayed, but it's usually worth it. The Protecting Americans from Tax Hikes (PATH) Act requires that the IRS hold refunds until mid-February for returns that claim either or both of these credits. The idea is to give the IRS time to make sure that everyone claiming these credits does indeed qualify. 

Avoid Having a Tax Refund

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It might be nice to receive a lump sum of cash in the early spring, but receiving a refund isn't necessarily a good thing. Most tax refunds are the result of overpaying taxes throughout the year. You're essentially providing the government with an interest-free loan.

Consider adjusting the withholdings from your paycheck by submitting a new W-4 form to your employer so less money is taken out of your pay. You'll have more money in your pocket each payday this way rather than waiting for the IRS to return it to you at the end of the year. But be careful not to adjust too much. If too little is withheld from your paychecks, you could end up owing the IRS.