More than eight in ten taxpayers use direct deposit to get their money, according to Benefits.gov. In addition, the IRS and the United States Treasury Department sent more than 100 million payments through with the . Some people are even required by the US Treasury to use direct deposit to receive their money, such as .
We understand that if you are hesitant to share personal banking information with another entity, and there are two potential drawbacks that some may encounter – we’ll explain below. Overall, you may find the benefits of setting up a direct deposit with the IRS this year. There are also several. We will tell you how to do it.
Get your tax refund back weeks earlier
When you file your tax return, you usually have the option to add a bank account so that you can receive your refund via direct deposit. “The best and fastest way to get your tax refund is to have it electronically deposited into your financial account for free,” says the IRS. You can have your money deposited in up to three different accounts if you want to split up your tax refund.
You can also expect a faster refund if you combine direct deposit with electronic filing, instead of printing and emailing paper tax returns. In fact, the IRS expects nine out of ten taxpayers to receive their refund within 21 days of filing electronically with direct deposit, if there are no issues with their tax returns.
Also, keep in mind that the IRS asks the taxpayer not to file paper returns if possible. Filing your old-fashioned tax return can add to the processing delay the IRS is already experiencing due to a backlog of 6.9 million raw paper returns from last year. Filing your tax return closer to the start of the tax season rather than the deadline will help you tooalso.
You may also receive your next stimulus check sooner
Generally people who hadreceived their first and much sooner than those who didn’t. Now that one want to have your direct deposit information set up as soon as possible. To do this, you must enter your bank details when you enter this year.
Unfortunately, the IRS has never stopped. Instead, this group will have to claim their missing money as one on their taxes for 2020.
Because it is too early to know if new direct deposit registrations are possible for a, your safest bet is to sign up now if you have a the fastest possible way.
It costs less to use direct deposit
Each paper refund check issued costs U.S. taxpayers more than $ 1, but just a dime for each direct deposit, according to the IRS. In 2019, according to Bankrate, 125.3 million repayments were made, of which about 23 million by mail. That means, in 2019, it cost taxpayers about $ 23 million to send paper checks and about $ 12.5 million for direct deposit.
Are There Possible Downsides to 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).
Because the IRS has not opened a direct deposit registration through thesomeone who closed or changed bank accounts between the first and second check could not make the correction. If their checks were returned to the IRS, this group will likely have to claim their payments with the .
The second problem to know is that the IRS has sent direct wire transfers to millions of temporary bank accounts used by(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 tried to untangle the problem. While many have to claim the incentive check credit in their taxes, the companies have promised to work with customers to facilitate the process.
How to set up a direct deposit with the IRS when you file taxes
Select when filing taxes Direct Deposit as your refund method through yourand then type in your bank account and routing numbers. You can still add your bank account information even if you don’t receive a refund. You can find your account and routing number on your bank’s website when you sign up, call your bank branch, or find the numbers on a check. You can also provide your tax advisor with this information if you are not filing your own taxes.
If you have a, but you ask To get a missing stimulus check, you must submit Form 1040 or Form 1040-SR (PDF).
The IRS says your refund should only be deposited directly into a U.S. bank or an affiliated account with a U.S. bank, and it must be in your name, your spouse’s name, or both if it’s a joint account.
For more information, here. Plus, you could get it with a third stimulus check and .