Image courtesy of Stuart Miles at FreeDigitalPhotos.net
When filing your tax returns this year, consider using direct deposit for your refund. By doing this, you don’t have to worry about the mail “making the trip”, and also you won’t have to make a visit to the bank to cash or deposit the refund.
On top of that, direct deposit refunds usually are deposited more quickly than a check is delivered by mail, getting you the money faster. Among the many alternatives for the places you can have the money deposited to are virtually any bank account, as long as you have the routing and account information, as well as transferring your funds to your TreasuryDirect account to purchase US Treasury marketable securities and savings bonds. You can also split your refund to be deposited in two or three different accounts – the account(s) need to be title in your name, your spouse’s name, or both, not someone else’s account.
Of course, if you owe money to the IRS from past tax returns, your refund will be used to pay your debt first and foremost. You also have the option to apply any leftover refund toward your tax obligation for the current year as well.
If your refund is less than $1 (which is highly unlikely since tax figures these days are generally rounded to the nearest dollar), you have to specifically request a refund from the IRS in writing.
Setting up direct deposit is a relatively simple activity, whether you’re using tax software or paper filing your return. You just need to fill out the form with the appropriate bank routing and account information, and the deed is done. If requesting direct deposit to multiple accounts, you’ll need to use Form 8888. Form 8888 is also used to purchase paper I-series US Savings Bonds with your refund (limited to $5,000).
So do yourself a favor this year, and set up direct deposit of your tax refund. It’s flexible, convenient, simple, and secure.
Sterling Raskie, MSFS, CFP®, ChFC®
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100% agree!