Split Refunds With the IRS: What Is It and What Are the Benefits?
You have several options for receiving your federal income tax refund. You can split your direct deposit refund among two or three different accounts, with up to three different U.S. financial institutions, direct deposit your refund into a single checking or savings account, receive your refund in a paper check. If that doesn’t intrigue you, then you can buy up to $5,000 in U.S. Series I Savings Bonds with your refund. With split refunds, you have a convenient option for managing your money — sending some of your refund to an account for immediate use and some for future savings — teamed with the speed and safety of direct deposit. It’s a win-win.
A split refund lets you divide your refund, in any proportion you want, and direct deposit funds in up to three different accounts with U.S. financial institutions. You can also now use part or all of your refund to buy U.S. Series I Savings Bonds for yourself or someone else. Instead of depositing your refund into a checking or savings account and later moving part of your refund to another account, you can allocate your refund among up to three different accounts and send your money where you want it the first time. By splitting your refund, you get the convenience of directing some of your refund to your checking account for immediate needs and sending some to savings for future use. Plus, you get the safety and speed of direct deposit, meaning you will have access to your refund faster than if you opt to receive a paper check.
Splitting your refund is easy to accomplish as well. If you file your own taxes online, your filing software of choice should give you an option to deposit any refund into different accounts. If you file with an accountant, make sure to let them know your intentions to split up your refund including the account information.
However, taxpayers should take note that this privilege is only available to people who are owed refunds on current tax filings. You cannot elect to split your tax refund on a prior year original tax return. Refunds from a prior year cannot be directly deposited. The professionals at The Center for Financial, Legal, and Tax Planning are more than knowledgeable with regards to filing both personal and business tax returns. Please contact us at (618) 997-3436 with any questions.