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Instant Deposit: 3 Reasons to Sign Up for an Account When You Submit Your 2020 Taxes



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Use direct deposit to get your money back faster.

Sarah Tew / CNET

Have you started submitting your 2020 taxes with the IRS? Or do you wait until later in the seasonal tax return (it starts February 12th)? Either way, there’s one thing you’ll want to be sure to do: set up a direct deposit with the IRS when you submit an application. There are benefits when it comes to receiving your tax returns and a future third stimulus check, if and when Congress approves another direct payment.

More than eight in ten taxpayers use direct deposit to get their money tax returns, according to Benefits.gov. In addition, the IRS and the United States Treasury Department sent more than 100 million payments through direct deposit with the second stimulus control. Some people are even required by the US Treasury to use direct deposit to receive their money, such as Beneficiaries of social security.

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 benefits of filing your taxes for 2020 earlier. 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 too get your tax returns faster – and unpaid incentives control moneyalso.

Read more: This is how you track your 2020 tax refund once the IRS starts processing returns


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You may also receive your next stimulus check sooner

Generally people who had direct deposit set up with the IRS received their first and second stimulus controls much sooner than those who didn’t. Now that one the proposed third stimulus check is on the tablewant to have your direct deposit information set up as soon as possible. To do this, you must enter your bank details when you enter Submit your taxes for 2020 this year.

Unfortunately, the IRS has never stopped recipients of the second stimulus check set up direct deposit. Instead, this group will have to claim their missing money as one Refund discount on their taxes for 2020.

Because it is too early to know if new direct deposit registrations are possible for a third stimulus check, your safest bet is to sign up now if you have a possible future check for $ 1,400 or $ 2,000 the fastest possible way.

Read more: Forget about your tax refund. Stimulus checks are the reason why you should apply early this year

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If a third stimulus check is approved, you can get it sooner with direct deposit.

Sarah Tew / CNET

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 the Download the payment tracking toolsomeone 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 Refund discount.

The second problem to know is that the IRS has sent direct wire transfers to millions of temporary bank accounts used by tax filing software such as TurboTax and Jackson Hewitt (These accounts are a typical part of the third party tax preparation process). As a result, there were delays with delivery of second stimulus check 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.

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Direct Deposit is cheaper than receiving a check.

Sarah Tew / CNET

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 your tax softwareand 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 nonfiler, that is, someone who is not normally required to file taxes, but you ask Refund discount 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 what you need to know about incentive checks and your taxes for 2020. Plus, how much money you could get it with a third stimulus check and when and how to request an IRS payment track.


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