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Home / Tips and Tricks / Why you should set up a direct deposit with the IRS now – and correct mistakes, too

Why you should set up a direct deposit with the IRS now – and correct mistakes, too



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The IRS gives you the option to establish direct deposit or fix errors this tax season. There is a lot to know.

Sarah Tew / CNET

The IRS has just started accepting and processing it Tax returns 2020Or you submit your declaration now or wait until later in the seasonal tax return – Deadline is April 15th – You should strongly consider setting up a direct deposit with the IRS when you apply. In addition to benefits when it comes to get your tax refund (how to track it), there are also implications for a future third stimulus check, what would arriving before the end of the tax season(Here’s whether the IRS would use your 2019 or 2020 taxes for a third check.

Direct deposit is the most used payment method for stimulus checks. In fact, the IRS and the United States Treasury Department have sent more than 100 million payments through direct deposit with the second stimulus controlAnd according to Benefits.gov, more than 80% of taxpayers are already using direct down payments to receive their tax refund. Some people like Beneficiaries of social security, are even required by the US Treasury to use direct deposit to receive their funds.

There are two potential drawbacks that some people may encounter – we’ll explain them below. Overall, you may find the benefits of setting up a direct deposit with the IRS this year appealing. There are also several benefits of filing your taxes for 2020 earlierWe will tell you how to do it.

You can get your tax refund 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.

read more New child discount rules can give your family a check every month for a year

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, as long as 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 tax return the old-fashioned way 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 instead of closer to the deadline will also help you get your tax return faster – and any unpaid incentives check moneyalso.


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Stimulus Check # 3: What You Need to Know


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Your next stimulus check could also come 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 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.

Because it is too early to know if new direct deposit registrations are possible for a third stimulus checkYour safest bet is to sign up with the IRS now if you have a possible future payment of $ 1,400 the fastest possible way.

Also because stimulus checks are expected while the tax season is still running, filing your taxes early would the Next check is based on your 2020 submission instead of 2019, which can have certain benefits. Direct deposit would mean that you may receive the new payment sooner.

read more Forget about your tax refund. Stimulus control is 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

Fun fact: it’s cheaper for the Treasury to send your refund via direct deposit

Each paper refund check issued costs U.S. taxpayers more than $ 1, but it only costs 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.

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

You can now correct these errors

Unfortunately, the IRS has never stopped recipients of the second stimulus check set up direct deposit or fix errors in the bank account, forcing this group to claim their missing money as a Refund Discount on their taxes for 2020. But now you have the option to make adjustments that one third stimulus check not to go to the wrong account – such as an account you closed or if you entered your details incorrectly in a previous year.

If you want to spread your tax refund across multiple accounts, now is the time to do that. When you set up a direct deposit on your taxes, you can add up to three different bank accounts, which can be useful if you’re using one as a savings account.

What are the disadvantages 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).

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 an adjustment. If their checks have been 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 people have to claim the stimulus 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 your tax return

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 this information to your tax advisor if you are not filing your own tax return.

If you have a non-filer, 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 bank account, 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 2020Plus, how much money you could get with one third stimulus check and when and how to request an IRS payment track


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