Fastest (and Slowest) Ways to Get Your Tax Refund From the IRS

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 for getting your money more quickly. Understanding them can help you get your refund without delay so that you can start putting the money to use on your financial goals.

Get Your Tax Refund by Direct Deposit

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Direct deposit allows you to have your IRS refund electronically deposited into a financial account, saving you a trip to the bank. You won't be alone if you opt for it: Eight in 10 taxpayers use direct deposit to receive their refunds faster than they would have with a paper check—usually within three weeks.

You'll need to request a direct deposit in your tax preparation software or inform your tax preparer of this payment preference. If you're filing a paper return, request a direct deposit of your refund to a single checking, savings, or retirement account (an IRA, for example) on Form 1040 of your tax return. 

If you prefer, have your direct deposit split between multiple accounts—up to three in total. 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. 

Keep in mind: 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 it's important to ensure that your bank accepts direct deposits to the type of account you're selecting. 

Track your direct deposit refund online through the IRS Where's My Refund? tool.

Obtain a Tax Refund Anticipation Loan

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Also known as "rapid refunds" or "instant refunds," refund anticipation loans are short-term loans offered by tax preparation businesses against your expected tax refund from the IRS. They're usually 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 actually does arrive, it goes straight to the provider. The downside is that the speed will often cost you: You'll pay interest, as well as typical fees of $30 to $35, but some businesses charge exorbitant add-on fees of between $25 and $300 or more to process these loans. 

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

Additionally, 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.

Buy 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 U.S. Series I Savings Bonds when you file Form 8888 with your tax return. Just complete Part II of the form, and you'll receive your paper savings bonds within three weeks.

You're limited to a total purchase of $5,000 in bonds, and you must purchase one or more $50 bonds—no other face values are available through this program. The advantage of buying these bonds is that they earn two types of interest until they are redeemed or reach maturity: a fixed, standard rate, plus a rate that's adjusted for inflation.

Get a Refund by Paper Check

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A paper check is the slowest way to get your refund. But if you choose this option, e-file your tax return for speedier processing. Mailing the 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.

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. You'll need to contact the IRS through the toll-free number (800-829-1954) to initiate a refund trace.

You might also get a paper check if you make a mistake on Form 8888, such as an error in your bank account or routing number.

It's easy enough to make a mistake at tax time. You can correct or change your address with the IRS by completing Form 8822 and mailing it to set the matter straight. But if the wrong account number you gave the IRS actually belongs to someone else and the bank accepts the deposit into that account, you'll have to work out the problem with the financial institution.

Avoid Getting an IRS 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 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 could end up owing the IRS.

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.

Article Sources

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