Electronic Returns
If the tax return is going to be electronically filed and the taxpayer wants to include his or her direct deposit information, from the Tax Return Summary page select:
- E-File
- Federal Return Type: E-File: Direct Deposit
Continue through the steps as prompted on the E-File page. The taxpayer's direct deposit information will be entered in the Taxpayer's Bank Account Information section. The refund can be split between up to 3 bank accounts, paper check and/or used to purchase up to 3 savings bonds. The total deposits and savings bond purchases must equal the total refund.
- Select the Account Type, and enter the Bank Name. If the full amount of the refund will be deposited into this account, select Pull Refund. If the refund will be split and deposited into multiple accounts, enter the portion of the refund to be deposited into this account.
- Input the Routing Transit Number (RTN), Account Number. To reduce the possibility of an error, you will be prompted to enter the RTN and the account number twice. Make sure you get the RTN from a CHECK and not a DEPOSIT SLIP. Some banks use an internal routing number on their deposit slips rather than their RTN. Your client’s refund will be delayed for several weeks if the proper RTN is not transmitted to the IRS.
- If the refund is being split and deposited to more than one account, or if a portion of the refund should be mailed by paper check to the taxpayer, or to use a portion of the refund to purchase savings bonds, fill in the additional information in the Bank Accounts section, Paper Check Allocation section, and the Purchase Savings Bonds section.
Mailed/Paper Returns
To enter direct deposit information on a return being file by paper, from the Tax Return Summary page select:
- E-File
- Federal Return Type: Paper Return with Direct Deposit
Continue through the steps as prompted on the E-File page. The taxpayer's direct deposit information will be entered in the Taxpayer's Bank Account Information section. The refund can be split between up to 3 bank accounts, paper check and/or used to purchase up to 3 savings bonds. The total deposits and savings bond purchases must equal the total refund.
- Select the Account Type, and enter the Bank Name. If the full amount of the refund will be deposited into this account, select Pull Refund. If the refund will be split and deposited into multiple accounts, enter the portion of the refund to be deposited into this account.
- Input the Routing Transit Number (RTN), Account Number. To reduce the possibility of an error, you will be prompted to enter the RTN and the account number twice. Make sure you get the RTN from a CHECK and not a DEPOSIT SLIP. Some banks use an internal routing number on their deposit slips rather than their RTN. Your client’s refund will be delayed for several weeks if the proper RTN is not transmitted to the IRS.
- If the refund is being split and deposited to more than one account, or if a portion of the refund should be mailed by paper check to the taxpayer, or to use a portion of the refund to purchase savings bonds fill in the additional information in the Bank Accounts section, Paper Check Allocation section and the Purchase Savings Bonds section.
Direct Deposit Limits
In an effort to combat fraud and identity theft, the IRS limits the number of refunds electronically deposited into a single financial account or pre-paid debit card to three. The fourth and subsequent refunds automatically convert to a paper refund check and are mailed to the taxpayer. When this happens, the taxpayer will receive a notice informing them that the account has exceeded the direct deposit limit and that they will receive a paper refund check if there are no other issues with the return.
The limit applies to financial accounts, such as bank savings or checking accounts, as well as to prepaid, reloadable cards or debit cards.
Few taxpayers are affected by this limitation. That said, the limit may affect families in which the parent's and children’s refunds are deposited into a family-held bank account. Taxpayers in this situation should make other deposit arrangements or expect to receive paper refund checks.
The direct deposit limit helps prevent criminals from easily obtaining multiple refunds. It also protects taxpayers from preparers who try to obtain payment for their tax preparation services by depositing part or all of their client's refund into the preparer's own bank accounts.
Direct deposit must only be made to accounts bearing the taxpayer's name. Preparer fees cannot be recovered by using Form 8888 to split the refund, or by preparers opening a joint bank account with taxpayers. These actions by preparers are subject to penalty under the Internal Revenue Code and to discipline under Treasury Circular 230.
Additional Information:
IRS: Circular 230 Tax Professionals