Why taxpayers should have their tax refund direct deposited
Now that tax season has here, you should think about signing up for direct deposit with the IRS, even if you don't plan to file until after the April 18 deadline (or later if you file an extension). This will not only help you get your tax refund much faster, but it will also help you get any other money owing to you, like child tax credit money, much faster.
When you file your taxes, you usually have the option of adding a bank account so that your refund can be deposited directly into your account. "The best and quickest way to collect your tax refund is to have it electronically transferred into your financial account for free," according to the IRS. If you choose to split your tax return, you can have it deposited in up to three different accounts.
If you combine direct deposit with electronic filing instead of printing and submitting paper tax forms, you can expect a faster refund. In fact, the IRS advises that you set up direct deposit to avoid any return delays. Last year, the average time it took for individuals who filed electronically with direct deposit to receive their tax refunds was 21 days, not including those who experienced complications with their tax return.
You should also be aware that the IRS is urging taxpayers to e-file their forms rather than filing paper filings. Filing your return the old-fashioned method may result in another processing delay, similar to the one encountered by the IRS last year. Filing your tax return closer to the start of the tax season, rather than closer to the deadline, will ensure that you receive your refund — as well as any outstanding child tax credit money.
How to set up a direct deposit when you file your tax return
When filing taxes,
Using your tax software, select Direct Deposit as your return method.
Fill in your bank account and routing numbers — even if you're not getting a refund, you can still enter your bank account information.
When you sign in to your bank's website, phone your bank branch, or locate the numbers on a check, you can get your account and routing number.
If you don't file your own taxes, you can give this information to your tax preparer.
If you're a nonfiler, or someone who isn't required to file taxes, but you want to apply for the Recovery Rebate Credit to replace a lost stimulus check, you'll need to file Form 1040 or Form 1040-SR (PDF).
According to the IRS, your refund should only be placed directly into a US bank or a US bank-affiliated account in your name, your spouse's name, or both if it's a joint account.
You'll also receive your child tax credit money sooner.
People who had direct deposits with the IRS received all of their child tax credit payments far sooner than those who received paper checks on average. If you want to obtain the rest of your child tax credit money as soon as possible, you'll need to have your direct deposit information set up as soon as feasible. You'll need to provide your banking information while filing your 2021 taxes this year to accomplish this.
It is less expensive to send your return by direct deposit than by paper check.
According to the IRS, each paper return check costs more than $1, but each direct deposit costs only a penny.
Now is the time to fix the errors.
It's possible you didn't receive your money or it arrived as a paper check if you never updated your banking information in the IRS child tax credit site. You can change those direct deposit details in the site or when you file your taxes online to avoid this in the future.