Taxpayers across America often find filing for taxes an overwhelming task. This is essential because of the fact that there are several different aspects that need to be accounted for when filing for the returns, and missing out on any integral information in the tax returns might result in unfavorable circumstances for the filer.
Therefore, filing for taxes, as well as for refunds requires strict vigilance on the part of the taxpayer, since it can eventually lead to severe repercussions.
In particular, filing for tax refunds also requires taxpayers to be wary of what exactly they are claiming a refund for, and what to expect in return.
How are Tax Refunds made?
Tax refunds can be made in three different ways, depending on the preference of the taxpayer. The three different ways in which tax refunds are made are as follows:
- Direct Deposit in bank accounts – using this refund method, taxpayers directly deposit funds in the bank accounts.
- Having proper checks emailed – taxpayers can also choose the option of directly emailing checks to the households.
- U.S. Savings Bonds – this method is relatively less popular as compared to the two other methods, but it is still not nonexistent.
Amidst the three options that are mentioned above, it can be seen that Direct Deposits tend to be one of the most preferred sources of refund transfer by individuals.
There are a couple of reasons why tax refunds via direct deposits are preferred as compared to other methods of refund:
- Tax refunds received via direct deposit are processed faster as compared to other alternates.
- If tax refunds are applied via direct deposits, child tax credits are also processed faster.
- Getting tax refunds via direct deposits is considered to be a cheaper method as compared to tax refunds via paper checks.
How does Direct Transfer work?
When it comes to receiving tax refunds, direct deposits are deposited directly into the account. There are various different options that are available within the category of direct transfer of refunds.
These categories are as follows:
- Splitting of Direct Deposit Refund into different accounts: The tax refund can be split across different accounts, up to accounts within three U.S. Financial Institutions.
- This can be done regardless of electronic filing or filing via paperwork. It must also be noted that splitting the return does not cause a delay in processing the refund itself.
- Directly depositing funds into a single checking or saving account: Using this method, all refunds can be deposited in a single IRS account.
- Directly depositing funds into the spouse’s account – only if the couple has filed for taxes jointly: As far as joint returns are concerned, it can be seen that tax refunds can be deposited directly in the bank accounts.
What are the benefits of splitting the refund?
A split refund is an option that is given to the taxpayers where the refund can be deposited into a checking or savings account, which can later be transferred to some other account.
Refunds received from the IRS can be split into one, two, or three different accounts.
By splitting the refund, taxpayers get the convenience of getting the amount in checking accounts for some immediate needs and some future use.
Rather than splitting them once they are received, it is more convenient for taxpayers to receive them in split accounts so that they can be received in the respective accounts only.
Split refunds can be processed under both, electronic filing of returns, as well as normal filing of returns. It is also important to note that split funds do not result in a delay in refund processing, regardless of what people mostly think, or believe.
Refunds can also be split between direct deposits and paper checks. However, the condition remains the same: the recipient should be an individual who is claiming a refund or the account that is mentioned should be the spouse’s account, at a minimum.
Can IRS Refund Checks be deposited in other accounts?
In short, no. IRS Refund Checks cannot be deposited in other accounts. In fact, IRS Refund Checks can only be deposited in the accounts that belong to the filer.
Regardless of the fact that there is an option to split the amounts across different accounts, the account holder has to be the person filing the taxes.
Alternatively, IRS Refund Checks can also be deposited in the spouse’s accounts, only if the couple has filed their taxes together.
What types of accounts are eligible to receive funds via direct deposits?
Funds can directly be refunded to any checking or saving accounts that are maintained within U.S. financial institutions, as long as financial institutions accept direct deposits for the given account category.
For example, savings accounts mostly include passbook savings, individual development accounts, as well as health savings accounts.
It is also important for IRS to encourage taxpayers as well as their preparers to make sure that all details, including accounting numbers, are properly entered in the funds where the refund has to be deposited.
Similarly, it is also important to make sure that the account that is mentioned for the refund has to be a personal account, a spouse account, or a jointly-held account.
When do the IRS deposit refunds?
IRS normally deposits refunds two times a week. On the first day of processing, IRS normally keeps checking processes for direct deposits, and paper checks.
On the other hand, on the second day of processing, IRS takes care of the third type of refund: U.S Savings Bonds.
How can the refund status be checked?
In order to check for the IRS refund status, the IRS has introduced the ‘Where’s my Refund Tool’. This is available on the IRS website.
It is also referred to as the ‘Refund Hotline’.
However, it must also be noted that the refund status is not updated on a continual basis. In fact, it is updated on a periodic basis every week.
It is mostly updated on Wednesday. In the case of electronic filing, the applicant is supposed to wait for a period of 72 hours from the time stamp where the refund status is updated.
For normal filing systems, applicants are also advised to wait for a period of 3 weeks, before the portal is updated.
How can the refund process be fastened?
Despite the fact that in most cases, refunds are generated in a period of 21 days, there are some tips and tricks that can be used by taxpayers in order to expedite the return filing process.
Some of these tips and tricks are as follows:
- Electronic filing of the tax returns
- Selecting the option of Direct Deposits
- Make sure all figures and information that is presented on the financial statements is accurate
- Keeping proper records and documentation