How to Get Your Tax Refund by Direct Deposit

It's Fast and Convenient, But Mistakes Can Cost You Your Refund

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You can wait at your mailbox for a paper tax refund check to snail-mail its way to your address, but that's frustrating and can cause problems if you really needed the money yesterday. Fortunately, the Internal Revenue Service lets you have some or all of your federal tax refund directly deposited to your bank account. All you have to do is ask. 

Of course, asking involves some paperwork, and you might have to file an extra tax form, but eight out of 10 taxpayers elect this option. According to the IRS, it processes these refunds in less than 21 days.

How to Request Direct Deposit

You can request direct deposit right on your 1040 tax return if you want the money sent to just one account. It must be in your own name, in your spouse's name if you're married, or in joint names if you hold the account with your spouse.

You must indicate your bank's routing transit number, your bank account number, and the type of account—checking or savings—on your tax return. The IRS will electronically send your entire refund to that bank account, or you can use Form 8888 to split your refund among different accounts if you want portions of your refund directly deposited in up to three.

The IRS has limited this option to three accounts since January 2015 in an effort to thwart identity theft and fraud.

Form 8888 also allows you to use your refund to purchase U.S. Savings Bonds,  or you can choose have the money sent to your IRA.

Enter all this information on lines 20b, 20c and 20d of the 2018 version of Form 1040. You can elect direct deposit whether you e-file or send in a paper return—how you file doesn't matter.

The IRS radically changed the Form 1040 for the 2018 tax year, so these lines are not the same as they were on the 2017 tax return. The IRS is additionally in the process of changing up Form 1040 again for the 2019 tax year—the return you'll file in 2020—so the direct deposit lines might be different on that tax return as well.

Triple Check Your Bank Account Information

The IRS is not responsible for any errors you might make when 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. Moreover, the IRS will not 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 you submit 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. Refunds issued via direct deposit are not covered by the government's CFIF.

If You Make a Mistake

If you do make an error but you catch it before the IRS has processed your refund deposit, you can call the IRS at 1-800-829-1040 from 7 a.m. to 7 p.m. Monday through Friday, to stop the direct deposit. 

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

If Your Refund Is Sent to the Wrong Bank Account

You can call the IRS and ask them to initiate a refund trace to recover your money if the account numbers indicated on your tax return are correct but you didn't receive your direct deposit. But if the routing number you indicated on your return is incorrect, contact the bank at which your refund was deposited.

You can identify the bank by looking up which is associated with the routing number you entered. This information is available in a search engine online

Reach out to the ACH manager at that bank to see if you can persuade them to send the refund 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 for taking legal action to recover a refund that was directly deposited into a wrong account.

Follow up by filing Form 3911, the Taxpayer Statement Regarding Refund, with the IRS 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 tax preparers are altering the direct deposit bank information to divert funds into their own accounts. This is fraud. Tax refunds should be directly deposited only into a taxpayer's bank account.

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

Article Sources

  1. Internal Revenue Service: "Get Your Refund Faster: Tell IRS to Direct Deposit your Refund to One, Two, or Three Accounts," Accessed Nov. 22, 2019.

  2. Internal Revenue Service. "Direct Deposit Limits," Accessed Nov. 22, 2019.

  3. Internal Revenue Service. "Form 8888 Allocation of Refund (Including Savings Bond Purchases)," Accessed Nov. 22, 2019.

  4. Internal Revenue Service. "Refund Inquiries 18," Accessed Nov. 22, 2019.