Few people look forward to doing their tax returns each year, but sometimes a refund check makes the whole process worthwhile.
In recent years, many Americans have opted for direct deposit so their refund is automatically placed into their bank account.
Starting this year, taxpayers will be able to split their refund so it's deposited in up to three different accounts, whether at banks, mutual funds, brokerage firms or credit unions. The deposits do not have to be in equal amounts, either. To take advantage of the new opportunity, taxpayers must complete the new Form 8888, indicating where the funds should be sent.
That means you can choose to have part of your refund placed in your checking account for immediate spending, part in your savings account for long-term use, and the rest in, say, an IRA for retirement saving.
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The IRS will electronically deposit refunds to taxpayers' accounts held by U.S. financial institutions, providing that accurate account and routing numbers are supplied and the financial institutions accept direct deposits for the type of accounts designated.
Be sure to double-check the routing numbers for each institution you'll be using. An incorrect entry on Form 8888 could result in a paper check for the entire refund. And if the money goes into someone else's account due to a number mix-up, the IRS assumes no responsibility. You're responsible for settling the matter with the financial institutions involved.
There are a few folks who won't be able to take advantage of the new option — namely, some tax software users.
If you use TurboTax or H&R Block's tax software, you won't find the split-refund option in either program (though it could be offered in future editions). However, CompleteTax and TaxACT are offering the split-refund option.
The split-refund option is available to taxpayers who choose direct deposit regardless of whether they filed the original returns on paper or in electronic format using Form 1040, 1040A, 1040EZ, 1040-PR, 1040NR, 1040NR-EZ or 1040-SS.
However, taxpayers filing Form 1040-EZ-T, Request for Refund of Federal Telephone Excise Tax, or Form 8379, Injured Spouse Allocation, cannot opt to split their refunds.
Also, taxpayers can continue to use the direct-deposit line on Form 1040 to electronically send their refunds to one account.
Note that taxpayers can do things much faster electronically than by paper. For those filing their taxes electronically, refunds are deposited in their accounts within two weeks. A paper check refund takes three weeks.
For those filing taxes on paper, the process is longer. They get their direct-deposit refunds within four to six weeks or paper checks within six weeks.
By using the IRS's popular "Where's My Refund?" feature, taxpayers can track their refunds. Go to www.irs.gov or call 1-800-829-1954.