5 Reasons to use Direct Deposit for Your Tax Refund
Feb 01, 2023Saving Strategies
There are a few ways to receive a tax refund – through a paper check, direct deposit, or as an issued payment to a U.S. Series Savings Bond, however direct deposit is an ideal and popular way to receive your tax refund. Let’s take a look at
some of the perks of direct deposit.
Set up is simple
When filing a tax return with either your tax preparer or via tax preparation software, simply
select direct deposit as your refund method. If you're using a checking or savings account to set up direct deposit, an account number and routing number will be needed. Direct deposit can be used for both paper and electronically filed tax returns.
Faster Payments
A prepared tax return with no issues typically takes the IRS about six to eight weeks to issue a paper check for a tax return. If you elect direct deposit, you should see your tax refund issued in about three weeks. You can track your refund using the
Where's My Refund? tool on the IRS website. Combining direct
deposit and electronic tax return filing can often yield the quickest turnaround time in receiving your refund.
Security
Using direct deposit to collect your refund can be more secure than receiving a paper check. If you elect direct deposit into your bank account, there is no risk of your refund being intercepted by a fraudster through the mail.
Free and Saves Money
Direct deposit is free and there are no hidden fees or charges from the IRS to initiate a direct deposit. Direct deposit also saves you money. It costs the nation’s taxpayers more than one dollar for every paper refund check issued, but only a dime
for each direct deposit made.
Split Refund
Direct deposit allows you to split your refund between up to three different financial accounts. For instance, this might include a checking account, savings account, or retirement account. If you’re filing electronically, tax preparation software
allows you to designate which three accounts you would like to send your refund to. If you’re filing a paper return, completion of IRS Form 8888, Allocation of Refund is required to split your refund between multiple financial accounts.
Have questions about tax forms or want to file with HAPO’s preferred tax preparation software?
Visit hapo.org to learn more!
Federal tax policy, including income tax brackets, rates, credits, deductions, refunds, application, etc., is regulated by the Internal Revenue Service of the U.S., and subject to change on a yearly basis. For the most recent information and updates, consult the official IRS website. Our content is for informational purposes only and is not intended as legal, tax or financial advice.
Sources: IRS.gov, hapo.livenow.org, turbotax.intuit.com
Annie Jacobs
Integrated Marketing Specialist | HAPO Community Credit Union