How to Get Your Tax Refund by Direct Deposit

It's Fast and Convenient, But Mistakes Can Be Made

Woman in bank filling out banking slip on counter
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You can wait at your mailbox for your tax refund to snail-mail its way to your address, but that can be frustrating and painful if you really need the money. Fortunately, the Internal Revenue Service is set up to direct deposit some or all of your federal tax refund to your bank account electronically. All you have to do is ask. 

Eight out of 10 taxpayers elect this option, and it's really very simple.

How to Request Direct Deposit

The IRS stressed in December 2020 that all tax returns should be filed electronically during the coronavirus pandemic. Processing of paper returns continues to be delayed due to limited staffing. You can elect direct deposit whether you file electronically or send in a paper return, however.

You can request a direct deposit right on your 1040 tax return if you want the money sent to just one account. Indicate your bank's routing transit number, your bank account number, and the type of account—checking or savings—on lines 35a, 35b, 35c, and 35d of your 2020 Form 1040.

The account can be in your name, in your spouse's name if you're married, or in joint names if you hold the account with your spouse.

You can also use Form 8888 to split your refund among up to three different bank accounts. Form 8888 allows you to use your refund to purchase U.S. Savings Bonds as well, or you can choose to have the money sent to your IRA.

The IRS processes most refunds in less than 21 days. You can use the Where's My Refund? tool to check on the status of your refund.

Triple Check Your Bank Account Information

The IRS isn't responsible for any errors you might make when you're entering your bank account information on your return or on Form 8888. It has no liability if your refund goes to John Doe because you transposed numbers or entered the wrong digits. It can't cancel payment of your refund and send a second payment to the correct account. 

Make very, very sure the information you've entered is correct before submitting it to the IRS.

Paper refunds are covered by the Check Forgery Insurance Fund (CFIF). The CFIF is a fund that settles non-receipt claims, but refunds issued via direct deposit are not covered by the government's CFIF.

If You Make a Mistake

The IRS might catch some mistakes, such as an omitted number that makes the account or routing number one digit short. Your return won't pass the validation check in this case, so you'll automatically receive a paper check by mail instead. The same will occur if your bank refuses the deposit for some reason.

You can typically call the IRS at 1-800-829-1040 from 7 a.m. to 7 p.m., Monday through Friday, to stop the direct deposit if you catch an error before the IRS has processed your refund deposit, but keep in mind that the agency is experiencing staffing shortages during the coronavirus pandemic.

Your Refund Goes to the Wrong Bank Account

Contact the bank at which your refund was deposited if the routing number you indicated on your return was incorrect. You can identify the bank by looking up the routing number you inadvertently entered on the IRS website.

Reach out to the ACH manager at that bank to see if you can persuade them to send the refund check back to the IRS, then call the IRS to alert them that the deposit will be coming back. Taxpayers in this position might want to consult with an attorney as well to review their options.

Follow up by filing Form 3911, the Taxpayer Statement Regarding Refund, if the bank doesn't respond after two weeks.

If Your Tax Preparer Alters Your Bank Info

The National Taxpayer Advocate has indicated that some less-than-reputable tax preparers have been known to alter direct deposit bank information to divert funds to their own accounts. This action is considered fraud. Tax refunds should be directly deposited only into a taxpayer's bank account.

Contact an attorney to review your options for legal action if this happens to you.

About That Stimulus Payment

Your 2020 stimulus check would automatically have been issued the same way if you received a refund through direct deposit for either your 2018 or 2019 tax returns, assuming you were eligible for the payment. The IRS provides an online tool you can use to check the status of your payment if you didn't receive it.

NOTE: Tax laws change periodically. You should always consult with a tax professional for the most up-to-date advice. The information contained in this article is not intended as tax advice and it is not a substitute for tax advice.