Have you started filing yourwith the IRS? Or are you waiting until later in the (it starts Feb. 12)? Either way, there’s one thing you definitely want to do — set up direct deposit with the IRS when you file. There are benefits when it comes to receiving your and a future , if and .
More than eight out of 10 taxpayers use direct deposit to get their Benefits.gov. In addition, the IRS and US Treasury sent out more than 100 million payments by with the . Some people are even required by the US Treasury to use direct deposit to receive their money, such as ., according to
We understand if you’re hesitant to share personal banking details with another entity, and there are two potential drawbacks that some may encounter — we’ll explain those below. Overall, you may find the benefits of setting up direct deposit with the IRS are compelling this year. There are also distinct. We’ll tell you how to do it.
Get your tax refund back weeks sooner
When you file your taxes, you usually have the option to add a bank account so you can receive your refund through direct deposit. “The best and fastest way to get your tax refund is to have it electronically deposited for free into your financial account,” the IRS says. You can have your money deposited in up to three different accounts if you’d like to split up your tax refund.
You can also expect a quicker refund if you combine direct deposit with electronic filing, rather than printing out and mailing in paper tax returns. In fact, the IRS expects nine out of 10 taxpayers will receive their refund within 21 days of when they file electronically with direct deposit, if there are no issues with their tax return.
You should also be aware that the IRS is asking taxpayers to avoid filing paper returns, if possible. Filing your return old-school could add to the processing delay the IRS is already experiencing as a result of a backlog of 6.9 million unprocessed paper returns from last year. Filing your tax return closer to the beginning of tax season rather than toward the deadline will also set you up to , too.
You also may receive your next stimulus check faster
On the whole, people who hadreceived their first and much sooner than those who didn’t. Now that a , you’ll want to get your direct deposit information set up as soon as possible. To do this, you’ll need to enter your banking information when you this year.
Unfortunately, the IRS never let. Instead, this group will need to claim their missing money as a on their 2020 taxes.
Since it’s too soon to know if new direct deposit registrations would open up for a, your safest bet is to sign up now if you’d like to receive a the fastest way possible.
It costs less to use direct deposit
Each paper refund check issued costs US taxpayers more than $1, but only a dime for each direct deposit made, according to the IRS. In 2019, 125.3 million refunds were issued, with around 23 million sent by mail, according to Bankrate. That means in 2019, it cost taxpayers roughly $23 million for paper check refunds to be sent out, and roughly $12.5 million for direct deposit.
Are there any potential drawbacks of direct deposit?
When it comes to stimulus check delivery, the second round of checks revealed two issues that affected millions of people (a relatively small percentage of all direct deposit recipients).
Since the IRS didn’t open up direct deposit registration through the, anyone who closed or changed bank accounts between the first and second checks was unable to make the correction. If their checks were returned to the IRS, it’s likely this group will need to claim their payments using the .
The second issue to know about is that the IRS sent direct deposit transfers to millions of temporary bank accounts used by promised to work with clients to ease the process.(these accounts are a typical part of the third-party tax preparation process). As a result, there were to this group, as the IRS and the companies attempted to untangle the problem. While many may need to claim the stimulus check credit in their taxes, the companies have
How to set up direct deposit with the IRS when you file taxes
When filing taxes, select Direct Deposit as your refund method through your, then type in your bank account and routing numbers — you can still add your bank account information even if you’re not getting a refund. You can find your account and routing number on your bank’s website when you sign in, call your bank branch or locate the numbers on a check. You can also give your tax preparer this information if you don’t file your own taxes.
The IRS says your refund should only be deposited directly into a US bank or US bank-affiliated account, and that it needs to be in your name, your spouse’s name or both if it’s a joint account.
For more information, here’s. Plus, you could get with a third stimulus check and .