There’s no question that the best thing about tax season is finding out about your refund. The IRS sends back a tax refund in a few different ways—with the two most common options being direct deposit or a personal check.
There’s no wrong choice here; you’ll eventually receive your refund either way. However, each option brings unique advantages to the table. To help you with this decision, here’s a guide on whether you should have your return sent via check or direct deposit.
Direct deposit is a relatively new feature that was added by the IRS within the last few decades. Seasoned taxpayers are often less familiar with this approach because receiving a refund via check used to be the only option. Many taxpayers prefer direct deposit because it delivers their refund faster on average.
Direct deposit offers greater speed and convenience compared to checks. The IRS reports that the typical direct deposit for a refund is issued within 21 days of e-filing the federal tax return. In comparison, the IRS reports that it can take up to four to six weeks to receive a refund by mail with a check.
Security is the biggest advantage of direct deposit. With this approach, you won’t need to worry about the IRS check getting lost in the mail—or someone taking it from your mailbox. The funds simply go into your bank account without the need to deposit a physical check beforehand.
The IRS also allows taxpayers to spit the refund into multiple bank accounts. However, the accounts are strictly limited to domestic accounts; foreign accounts are not allowed.
Several taxpayers still favor the old-fashioned approach of receiving a refund in the mail. Some prefer this option because it doesn’t require them to give the IRS their personal checking account number. Others do it because they prefer to cash the check instead of sending it into a bank account.
Again, it’s important to note that you’ll need to wait longer to receive a refund by mail. This isn’t a major problem if you aren’t planning on spending your deposit immediately—but it could inconvenience you. If getting access to your refund money is a top priority, then you may want to go with direct deposit instead.
One way you can expedite the mailing process is by filing earlier. A good portion of taxpayers wait until the April 15 deadline to file—so if you get a head start in February or March, you can expect to receive a paper check in the mail closer to four weeks compared to six.
The biggest concern with getting a refund check sent in the mail is potential fraud. When checks don’t arrive on time, it’s usually just because the U.S. Post Office misplaced or lost the piece of mail. However, it’s possible for the check to be stolen while in transit to you, making you a potential victim of fraud.
Every year, millions of dollars in tax refunds do not reach the appropriate recipients because the checks are deemed “undeliverable”. Therefore, you need to spend a little extra time making sure you have the correct and updated mailing address—especially if you might be moving between the time you file and the time you are due to receive a refund.
According to the IRS, eight out of ten taxpayers receive their tax refund via direct deposit. Why? Direct deposit is simply quicker, more convenient, and secure. It saves you from making a trip to the bank—as well as waiting longer for your refund to arrive.
The IRS utilizes the same electronic transfer system that nearly 98 percent of all Social Security and Veterans Affairs recipients use for their direct deposit. Therefore, the direct deposit option offered by the IRS is safe and secure.
When you go to submit your return, make sure that you have the correct account number and routing number of the account. You are allowed to split the refund into two to three separate accounts if you prefer.
Levy Tax & Associates has more than 20 years of experience supporting taxpayers through tax resolution, accounting and audit help. We can assist you with getting your refund back ASAP. Visit www.www.levytaxhelp.com to learn more about how our team can resolve your tax problems.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.