If you're expecting a tax refund from the Internal Revenue Service (IRS), how fast that money gets to your bank account depends on the options you choose when filing. Learn how different ways of filing can speed up or slow down the process of getting your tax refund.
Direct Deposit: 3 Weeks or Less
Getting a tax refund via direct deposit allows you to have your IRS refund electronically deposited into a financial account, saving you a trip to the bank. This is a popular option: eight in 10 taxpayers use direct deposit to receive their refunds faster than they would have with a paper check.
If you file a paper return and choose direct deposit, your refund will usually be issued within three weeks. To set up direct deposit, you'll need to provide the account number and routing number for the account where you want your refund sent. You can find this information in your online account information or at the bottom of a paper check.
If you give the wrong account number to the IRS and the bank accepts the deposit into that account, you'll have to work out the problem with the financial institution.
You can have your direct deposit split between up to three different accounts. All these accounts must be held in your name, your spouse's name, or both (if it is a joint account). You can choose a checking, savings, or retirement account, such as an IRA.
Your tax preparation software will walk you through requesting this type of payment. Otherwise, complete and submit IRS Form 8888 with your tax return, which instructs the IRS to split your refund among certain accounts.
You can also use Form 8888 to request part of your refund by direct deposit and the balance by paper check.
Refund Anticipation Loan: Just a Few Days
Also known as "rapid refunds" or "instant refunds," refund anticipation loans (RALs) are short-term loans offered by tax preparation businesses against your expected tax refund from the IRS. They're most frequently offered to low-income taxpayers.
You can get the money a few days in advance, either to your bank account or via a prepaid card. When your refund does arrive, it goes straight to the provider.
These loans have significant downsides. You'll pay interest for the loan, along with typical fees of $30 to $35. Some businesses charge huge add-on fees of between $25 and $300 or more to process these loans.
Refund anticipation loans also come with risks of tax fraud and abuse. They can be used as a way to hide the full cost of tax preparation. Unqualified or unscrupulous tax preparers also may prepare tax returns incorrectly in order to qualify for a larger refund, which they can then profit from by offering RALs.
American Express offers a product called the Serve Card that is a safer form of a RAL. You can get your refund up to two days sooner than you would with direct deposit if you have it directed to this card.
Some tax preparers, including Jackson Hewitt, offer zero-interest, no-fee refund advances to qualified individuals who use their companies to do their taxes. This option provides a low-cost alternative to traditional refund anticipation loans, as you'll only need to pay for the preparation of your taxes.
Savings Bond Purchase: 3 Weeks
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 U.S. Series I Savings Bonds when you file Form 8888 with your tax return.
You'll need to complete Part II of the form, and you'll receive your paper savings bonds within three weeks. You can buy them for yourself or for any other beneficiary you name on the form. You're limited to a total purchase of $5,000 in bonds per calendar year.
The first $250 worth of savings bonds you purchase will be filled in $50 denominations, meaning you'll receive bonds worth $50 totaling up to $250. Any amount over $250 will be filled using the fewest number of bonds possible.
For example, if you buy $900 worth of savings bonds, you'll receive six $50 bonds (worth $300), one $100 bond, and one $500 bond for a total of $900 worth of savings bonds.
Choosing to buy savings bonds with your refund means you won't receive that portion of your refund in cash. Instead, you'll receive savings bonds worth this amount as an investment.
The bonds will then earn two types of interest until they are redeemed or reach maturity: a fixed, standard rate, plus a rate that's adjusted for inflation.
Paper Check: Up to 8 Weeks
A paper check is the slowest way to get your refund. If you choose this option, e-filing your tax return will make for speedier processing: Receiving a check takes about three weeks from the time the IRS receives your electronic return and six to eight weeks from the time it gets your paper return.
If it has been at least four weeks since you filed your taxes and you are waiting for your refund to arrive, you can check on its status by calling 1-800-829-4477. You will need to provide the following:
- First Social Security number shown on your return
- Filing status you claimed
- Amount of your refund
If your check takes longer than eight weeks to arrive, it may have become lost in the mail. You'll need to contact the IRS through the toll-free number at 1-800-829-1954 to start a refund trace.
There may be times that you receive a paper check even if you attempt to choose another method of receiving your refund, such as direct deposit. If this happens, it is usually because of an error on your direct deposit request form.
If you request your refund by paper check, make sure you give the IRS the correct mailing address. If you discover you made an error after you file your taxes, you can correct or change your address with the IRS by completing and submitting Form 8822.
Adjusted Withholdings: Right Away
It might feel nice to receive a lump sum of cash in the early spring, but receiving a refund from the IRS 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 that less money is taken out of your pay. You'll have more money in your pocket each payday 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 may be charged an underpayment penalty or interest when you file your taxes. In general, you should try to have your withholding or estimated taxes match your tax liability as closely as possible.
Major life events, such as moving, starting a new job, getting married or divorced, or having a child, can change your tax liability. Always recalculate your tax withholding after one of these changes.
You might also 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. If you claim this credit, the IRS cannot issue any portion of your tax refund before the middle of February.
No matter how you are receiving your refund, you should pay attention to how and when it is arriving. You can use the IRS's Where's My Refund? tool to track your refund online, catch errors, and make sure your money goes where it is supposed to.