The IRS prefers to issue refunds via direct deposit. This is faster and cheaper for the agency. But taxpayers should exercise extreme diligence with their direct deposit information, as a mistake can result in losing a tax refund forever. My advice is to always get a check, unless you are 100% sure that your bank information is correct.
The IRS can deposit your tax refund directly into your checking or savings account. The IRS publishes a calendar of when they send out direct deposits and mail out paper checks. You can check Publication 2043 (pdf) to find out when your federal tax refund is likely to be deposited into your account.
Direct Deposit is Available at No Additional ChargeDirect Deposit of your refund is a free service offered by the IRS and state tax agencies. Your tax preparer cannot charge you extra fees for using direct deposit. (This is forbidden by Treasury regulations governing tax professionals.)
Direct Deposit is Usually Safer than a CheckSince there's no check to get lost in the mail or stolen by someone else, getting your refund by direct deposit is considered safer. However, you must make sure your bank information is 100% accurate.
Direct Deposits are Sent out Earlier than Paper ChecksDirect deposit faster because the IRS sends out direct deposits earlier than they mail out paper checks. Generally, the IRS transmits direct deposits a full 7 days before they mail out a paper check.
Double Check Your Direct Deposit InformationDouble check your Bank Routing Number and Bank Account Number when you fill out the direct deposit section of your tax return. These numbers are just as important as double checking your name, address, and Social Security Number. If you aren't sure what your bank numbers are, call your bank and ask.
What Happens if You've Accidentally Put Down the Wrong Bank Information?You should verify your bank account information before sending in your tax return. However, if you discover a mistake in the direct deposit area you should call the IRS immediately at 1-800-829-1040 and ask that the IRS convert the refund to a paper check.
The IRS will assume that the information you put in the direct deposit area is correct and will initiate the direct deposit in as little as eight days. In fact the IRS has said that the "IRS assumes no responsibility for taxpayer error" as a result of inaccurate direct deposit information. (Source: Refund Inquiries on IRS.gov.)
Many taxpayers have reported losing their entire tax refunds simply by having an incorrect direct deposit. This is truly heart-breaking.
What to Do When Your Refund is Sent to the Wrong Bank AccountVerify the direct deposit information on your tax return versus the actual bank routing number and bank account number.
If the numbers you indicated on your tax return are correct, then call the IRS can ask them to initiate a refund trace to recover your refund.
If the numbers you indicated on your tax return are incorrect, then you'll need to deal directly with the bank in which your refund was deposited. You'll know which bank and bank account it is, since you have the bank numbers listed on your tax return.
- Find the bank by looking up which bank is associated with the routing number shown on your tax return.
- Talk to the ACH manager at that bank.
- Persuade the bank to sent the refund back to the IRS.
- Call the IRS and explain that the bank will be sending back the refund.
- Ask the IRS agent to fill out a Taxpayer Advocate Service Request (Form 911) to route your case to the Taxpayer Advocate Service.
- When the Advocate contacts you, explain that you want this incident added to their annual report as a direct deposit error.
- In the future, always get a check, unless you are 100% sure that your bank info is correct.