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 Main Menu of the tax return select:
- Mark Return Electronic
- Direct Deposit
- Input the Routing Transit Number (RTN), Account Number, the Type of Account, and the Bank Name. 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 correct RTN is not transmitted to the IRS.
- If you wish to direct deposit into multiple accounts select Form 8888. You will have the option to specify a deposit amount into as many as three different accounts.
Mailed/Paper Returns
To enter direct deposit information on a return being file by paper, from the Main Menu of the tax return (Form 1040) select:
- Payments, Estimates & EIC
- Direct Deposit Information
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: