The only thing that is exciting about tax season is if you are fortunate enough to receive a refund. If that is the case, you have various methods in which you can not only receive the refund, but also how it gets distributed.
A split refund is a situation where the taxpayer requests that the total refund amount get divided into up to three eligible accounts. The split refund does not have to go to the same financial institution as some individuals elect to distribute it to various accounts like checking, savings, retirement plans, or health savings.
Ways to Receive a Tax Refund
Regardless if you decide to deposit the entire refund into one account or distribute it through a split refund, you have a variety of different methods to receive the payment. These include:
- Provide a bank account number for direct deposit.
- Deposit portions of the sum into different accounts (maximum three).
- Receive a paper check from the IRS in the mail.
- Apply for a tax refund anticipation loan.
- Invest in savings bonds.
How to Speed Up a Refund
If you are a W-2 earner, you will spend the entire year paying taxes with the anticipation that you get a hearty refund at the end of tax season. Naturally, taxpayers are excited for this opportunity and if they qualify for a refund, want to receive it as soon as possible.
There are a couple simple steps you can take to receive your refund quicker:
- File early. The longer you wait until the April deadline, the more likely you are to hit a backlogged IRS. This means the refund will not get processed quite as quickly. Therefore, you are at an advantage to file early, as soon as you receive your W-2 or 1099, in order to receive a refund faster.
- Request to receive a refund via direct deposit. Though some like to not give their bank account information to the IRS, it does take longer to receive a check in the mail. So if getting your refund is urgent, you are much better off setting up direct deposit.
How to Split Your Refund
It is not difficult to split your tax refund into multiple accounts. In order to do so, you need to first file your federal and state returns like you would normally do.
Once it is confirmed that you will indeed receive a refund and you know the amount, it is time to decide how you want to allocate the funds.
You have the option to make a split refund request online or through the post office. If you want to file the request online, you need to create a Form 8888 (Direct Deposit of Refund to More Than One Account) and submit it.
The Form 8888 also applies to requests that are sent through standard mail. Download and print Form 8888, then follow the directions provided to make sure it reaches the correct office.
Information You Will Need for a Split Refund
The Form 8888 is fairly straightforward to understand and fill out. You will want to gather the following information before filling it out.
- Personal information (name, address, etc.)
- Social security number
- Checking and/or savings account numbers
- Routing numbers of the accounts
- The exact amount you want to deposit into each account
It is incredibly important that you double check this information is correct before mailing the Form 8888, or submitting it electronically. Why? Imagine the frustration and delay in receiving the funds if you accidentally entered the wrong account number or routing number.
It could take weeks to correct the error, and even more time to get the refund finally delivered to the account. So it pays to double check the information, and even get a second set of eyes to verify all of the information is 100 percent accurate.
Benefits of a Split Refund
There are many advantages to a split refund. It saves time as people used to get a check in the mail, then divide the refund into different accounts after the fact.
Now it can safely, quickly, and securely get sent to multiple accounts in the first place, making it ultra convenient. Additionally, part of the refund can get invested into U.S. Savings Bonds while the rest might be needed for immediate use.
One example is to deposit 50% into a personal checking account, 25% in a savings account, and 25% in U.S. Savings Bonds.
First Time Dealing with a Split Refund?
You want to make sure your refund gets to the appropriate accounts and that it gets there quickly. If you have questions about Form 8888 and dealing with the IRS to set up direct deposit, or if you are having issues concerning your refund, contact us at www.levytaxhelp.com.