There are many benefits of choosing to get your tax refund directly deposited into your account. However, there are also a few cautions to remember. Below is a list of 6 things to consider about IRS direct deposits.
1. Faster Money
Everyone knows that having a refund directly deposited into your bank account is faster than waiting for a check. Checks sent through standard mail usually take about 10 weeks to arrive while directly deposited checks usually show up in about 10 days. More than 61 million people had their tax refunds deposited directly into their bank accounts in 2007.
2. Security
Having a payment directly deposited is a very secure way of receiving your refund. First, there is no check to get lost – by you or the US Post Office. In addition, thousands of refund checks every year are returned to the IRS by the US Post Office as undeliverable. With a direct deposit, there is no risk of the check being returned and it lowers the risk of having a tax refund stolen.
3. Convenience
Getting your refund directly deposited into your bank account is much more convenient than waiting around for a check and having to drive to a bank to make the deposit.
4. Multiple Accounts
If you want to you can even deposit your refund into multiple bank accounts. This is part of the IRS’ new "split refund" option. This option allows you to divide your refunds among as many as three checking or savings accounts and three different financial institutions. Please keep in mind that some institutions do not allow a joint refund to be deposited into an individual account. Check with your bank or other financial institution to make sure your direct deposit will be accepted before submitting a request.
5. Wrong Information
Please remember that with direct deposits, if you enter the wrong information you can loose your refund completely. The IRS assumes no responsibility for refunds lost due to an error on your part. If the wrong account number you enter belongs to some one else then they will get your refund. It is then up to the financial institution to fix the error. However, if your refund is sent to a nonexistent account the bank will send the money back to Washington. The money then goes to the U.S. Treasury depository, and is usually lost forever.
6. Avoid Scams
There are dozens of new IRS scams every single day. Many of them use the words e-file and direct deposit to confuse taxpayers into giving up their financial information. Make sure that you only give your bank account information to the IRS through a secure method. Also keep in mind that the IRS will NEVER email you asking for your financial information. If you receive an email like this then odds are it’s a scam.